Do I Have Enough to Retire? 7 Signs You’re Ready

Do I Have Enough to Retire? What “Enough” Really Means

“Enough” isn’t one magic number. It’s the fit between what you’ll spend, the dependable income you’ll receive, and how your portfolio behaves in good and bad markets. When those pieces line up with healthy safety margins, the question Do I have enough to retire becomes a solvable math problem, with a plan to manage risk.

To build that plan, estimate annual spending, map guaranteed income (Social Security, pensions, lifetime annuities), and define how investments become a paycheck. Then stress test against taxes, healthcare costs, inflation, and market drawdowns so surprises don’t derail your lifestyle.

7 Signs You’re Ready to Retire

1) Your Annual Spending Is Clear (With a Safety Margin)

Start with the lifestyle you want, then put numbers to it. Build a budget for housing, healthcare, food, utilities, transportation, travel, gifts, and hobbies. Next, add a 10%–15% buffer for life’s surprises and inflation creep. That total is your Required Annual Spending.

Example: If your core budget is $78,000 and you add a 12% margin, plan for $87,360 per year. That becomes the benchmark your income sources and withdrawals must reliably meet.

• Pro tip: Separate needs from wants. If markets turn rough, you’ll know exactly where to trim without touching essentials.

2) Guaranteed Income Covers at Least Half of Core Needs

Guaranteed income (Social Security, pensions, and annuities) stabilizes your plan. The more of your essential costs they cover, the less markets dictate your day-to-day life. A practical rule of thumb is to cover roughly half or more of essential expenses with guaranteed income. It’s a preference, not a formal standard, and the right share depends on your risk tolerance and fixed costs.

Example: If core needs are $70,000 and Social Security plus a pension total $42,000, 60% of essentials are covered. Your $28,000 “gap” can come from a portfolio paycheck.

• Rule of thumb: If guaranteed income covers less than half, consider delaying Social Security, partial annuitization, or lowering fixed expenses to strengthen your floor.

3) Your Withdrawal Strategy Is Defined and Stress Tested

A sustainable withdrawal plan turns savings into a steady paycheck. Start with research-based guidance; recent studies place a ~3.7% “safe” first-year rate for a 30-year plan. Then add guardrails: set a target rate and nudge it down after weak markets and up after strong ones. Guardrails add flexibility and improve durability.

• Stress test: Model a 20%–30% equity drop in the first two years (sequence risk). If your plan remains viable, you’re in strong shape.

4) Debt and Big-Ticket Obligations Won’t Strain Cash Flow

High-interest debt has no place in retirement. A mortgage can be fine if the payment is modest relative to your guaranteed income. Also list near-term major costs (e.g., roof, car, relocation, weddings) and pre-fund them.

Example: Need $30,000 for a roof and $25,000 for a car within three years? Earmark those in cash or short-term bonds now. Don’t gamble on market timing later.

5) Healthcare and Insurance Are Fully Mapped

Healthcare can become your largest variable expense. If you retire before 65, compare ACA Marketplace plans and COBRA. Losing job coverage triggers a Special Enrollment Period.

COBRA often ends when Medicare starts and may not protect you from a Part B late-enrollment penalty. As you near 65, plan for your 7-month Initial Enrollment Period for Parts A and B.

Then choose Medigap + Part D or a Medicare Advantage plan. Enroll on time to avoid gaps and penalties. Finally, decide how to address long-term care risk: self-fund, insure part of it, or blend both.

• Bridge-to-65 plan: Estimate premiums, deductibles, and out-of-pocket costs and fold them into your spending number.
• Risk transfer: Ensure umbrella liability coverage and right-size homeowners insurance. If you consult part-time, check disability gaps and professional liability.

6) Your Tax-Smart Income Plan Coordinates Social Security, RMDs, and Roths

Taxes don’t retire when you do. The order you tap accounts can save a lot over time. Many spend taxable assets first, then pre-tax IRA/401(k), and save Roth for last. However, the “gap years” after you stop working and before RMDs start at age 73 can be ideal for partial Roth conversions at favorable brackets.

Example: The most favorable window often occurs after retiring and before RMDs at 73 and before you claim Social Security. Delaying Social Security increases benefits only until age 70.

• Coordinate: Consider Qualified Charitable Distributions starting at age 70½; once RMDs begin at 73, QCDs can satisfy all or part of them. The indexed annual QCD limit is $108,000 in 2025. Also watch capital-gain harvesting and Medicare IRMAA thresholds to avoid bracket creep.

7) Liquidity and Allocation Match Planned Spending

Retirement cash flow is calmer with segmented reserves. Keep about 1–2 years of withdrawals in cash or near-cash, several years in high-quality bonds, and the remainder in diversified equities for long-term growth. Tailor exact amounts to your risk, taxes, and withdrawal pattern. This “bucket” structure helps you avoid selling stocks at the worst time.

Example: If you plan to withdraw $90,000 annually, hold ~$90,000–$180,000 in cash/short-term instruments, several years in bonds, and the rest in a global equity mix aligned to your risk tolerance.

Quick Scorecard: Are You Ready?

Rate each area below. If you see multiple “Fix” markers, shore up those items before setting your retirement date.

Case Studies: How the Numbers Come Together

Case Study A: “Late-50s Early Exit”

Profile: Age 59, retiring at 60. Portfolio $1.1M (70/30 stocks/bonds), home paid off. Annual spending target $84,000 including a 10% buffer. No pension. Social Security at 67.

Analysis: Guaranteed income at 60 is $0, so the full $84,000 must come from the portfolio until 67. A seven-year bridge with a 70/30 mix is vulnerable if markets falter early. They adopt a bucket plan: ~$170,000 in cash/short-term for two years, ~$300,000 in bonds for years 3–5, and the rest in equities. They price ACA coverage and schedule modest Roth conversions in low-tax years.

Outcome: After stress testing a 25% equity drawdown in year one, the plan still works without panic selling. Retirement at 60 becomes viable, supplemented by part-time work for the first two years to add flexibility.

Case Study B: “Work-to-70 Optimizer”

Profile: Age 66, plans to retire at 70. Portfolio $2.2M (60/40), mortgage $1,200/month, spending target $110,000. Social Security at 70 estimated at $48,000; small pension $9,000.

Analysis: At 70, guaranteed income is $57,000, i.e., about 52% of needs. The withdrawal gap of $53,000 is ~2.4% of the portfolio, comfortably conservative. Over the next four years, they accelerate mortgage payoff, fill top tax brackets with planned Roth conversions, and build a two-year cash bucket.

Outcome: Entering retirement with low fixed costs, strong guaranteed income, and a tax-efficient mix, they implement a 3.6%–4.4% guardrail policy and pass the readiness scorecard with ease.

Case Study C: “Reluctant Retiree with a Hobby Business”

Profile: Age 63, $900,000 portfolio (55/45), no pension, Social Security at 67. Spending target $72,000. Considering consulting that nets $18,000 annually.

Analysis: The side income offsets a quarter of the withdrawal need and reduces early-sequence risk. They also identify $8,000 of “wants” to trim temporarily if markets slump.

Outcome: With flexible income and spending, the plan shifts from borderline to strong. Retirement at 63 begins with confidence and guardrails in place.

How to Answer “Do I Have Enough to Retire?” in 60 Minutes

1. Write your annual spending number. Include a 10%–15% buffer.
2. List guaranteed income. Add Social Security (at your intended claim age), pensions, and annuities.
3. Compute your gap. Spending minus guaranteed income = annual withdrawal need.
4. Check your withdrawal rate. Divide the gap by portfolio value; use ~3.7% as a research-based starting point for a 30-year plan, then apply guardrails.
5. Stress test. Reduce your portfolio by 20% on paper. Recompute. Still viable? Good.
6. Map taxes. Plan draw order and Roth conversions before RMDs start at 73, watching IRMAA and brackets.
7. Confirm healthcare. Price ACA or Medicare plus Medigap/Advantage and include out-of-pocket costs.
8. Build liquidity. Set aside 1–2 years of withdrawals in cash or short-term vehicles.

Common Mistakes That Create False Confidence

• Ignoring inflation. Plans that skip routine “raises” risk lifestyle erosion over a decade.
• Chasing yield. Stretching for high dividends or risky bonds often backfires. Focus on total return and diversification.
• All-or-nothing spending. Treating every dollar as fixed makes plans brittle. Keep a flexible “wants” layer.
• Tax myopia. Overlooking bracket shifts, IRMAA, and RMD timing can cost a lot over 25–30 years.
• No cash buffer. Selling stocks in a downturn is the fastest way to derail otherwise solid plans.

When Waiting Another Year Makes Sense

Sometimes time is your strongest lever. One more year can allow you to:

• Save another 12 months of contributions, often into tax-advantaged accounts.
• Delay Social Security for a larger lifetime benefit (increases stop at age 70).
• Pay off a loan or self-fund a near-term big expense.
• Complete Roth conversions at attractive rates before RMDs kick in.

If any of the seven signs are weak, especially guaranteed income coverage or healthcare mapping, staying employed a bit longer can transform your readiness.

Frequently Asked Questions

How often should I revisit the plan?

Review annually at minimum and after major life events. Adjust spending, rebalance, revisit taxes, and retest your guardrails. A brief quarterly check-in can keep small issues from compounding.

Is the “4% rule” still valid?

Treat 4% as historical context. Recent research points to a lower ~3.7% starting rate for a 30-year plan. Use flexible guardrails to adapt over time and improve durability.

Should I pay off my mortgage before retiring?

It depends on rate, cash flow, and preferences. Just make sure the decision doesn’t drain cash reserves needed for near-term spending or complicate timely Medicare enrollment.

Putting It All Together

“Do I have enough to retire?” becomes a confident “yes” when math and margins work together. You know your spending number and buffer. Guaranteed income covers a meaningful slice of needs.

Your withdrawal plan is disciplined, flexible, and stress tested. Major debts and big-ticket items are addressed.

Healthcare is mapped, and taxes are managed over years, not just this year. Finally, cash reserves and allocation align with how you’ll actually spend.

If you’re close but not quite there, you still have levers: adjust the retirement date, lower fixed costs, add partial annuitization, delay Social Security, or create a modest side income for early years. Small, thoughtful moves can close surprisingly large gaps and help you answer, once more, “Do I have enough to retire?” with confidence.

Key Takeaways

• Know the target: Calculate annual spending with a 10%–15% margin.
• Cover the base: Aim for guaranteed income to fund at least half of core needs.
• Plan the paycheck: Use guardrails to guide sustainable withdrawals and stress test them.
• Think across years: Sequence withdrawals and consider Roth conversions before RMDs at 73.
• Stay liquid: Keep 1–2 years of withdrawals in cash, a bond bridge, and a diversified growth sleeve.