Ask Stacy: How Do I Know If I Have Enough to Retire?

It’s a question I’ve heard countless times. In less than 30 minutes, you can work out your own answer with five simple steps.

When I was working on Wall Street, back when I was a stockbroker and thought I knew more than I did, couples would come into my office nearly every week and settle into the chairs across from my desk with the same expression: tired, hopeful, and slightly embarrassed.

Then they would ask the same thing: “Stacy, just tell us. Can we retire? If not, when can we? And can you make it so safe we never have to worry about anything again?”

I wanted to say yes. The honest answer was usually, “I don’t know — let’s figure it out.”

That was decades ago, and the question still comes up. So does the anxiety behind it.

What many people don’t realize is that figuring out whether you’ve saved enough is not especially complicated. It is, however, uncomfortable.

Most people would rather avoid the numbers. The assumptions feel arbitrary, the math feels intimidating, and the whole process can seem like checking a forecast for a trip you can’t cancel.

But you can do it at the kitchen table in about half an hour. Here are the five steps.

1. Estimate what you will really spend

Ignore the rule of thumb that says you’ll need 70% or 80% of your pre-retirement income. That can be a starting point, but it is not the answer.

Look at what you spent last year. Use credit card statements, bank records, and anything else that helps. Add it all up, then subtract expenses that will likely disappear in retirement, such as commuting, dry cleaning, and your 401(k) contributions.

Then add back the costs that may rise, especially travel, hobbies, and health care.

According to Fidelity’s retiree health care cost estimate, a 65-year-old retiring now will need an average of $185,500 to cover health care expenses over retirement. That amount is per person, so double it for a couple.

The result is your annual retirement budget. Write it down.

2. Add up your guaranteed income

Next, go to SSA.gov and review your Social Security statement. It should show what you could receive at 62, at full retirement age, and at 70. Choose the age you expect to claim benefits, then note the annual amount.

If you have a pension, add it in.

If you have annuity income, include that too, along with any other steady income such as rental property.

Subtract that total from your annual budget. The remainder is the gap your savings must cover.

3. Multiply the gap by 25

This is the well-known 4% rule, and it has received plenty of criticism. The original idea, developed by financial planner William Bengen in 1994, was that retirees could withdraw 4% of savings in the first year, then adjust withdrawals for inflation each year after that, with a strong chance of not running out of money for 30 years.

Morningstar now recommends starting closer to 3.9% for new retirees.

Either way, the math is straightforward. Take your annual income gap and multiply it by 25. That gives a rough estimate of the portfolio you need to support your spending. If your gap is $40,000 a year, you will need about $1 million. If it is $60,000, you will need $1.5 million.

Now you have a target.

Quick aside: much of the financial advice online comes from people who were not around for the last recession. I’ve been writing about money for more than 40 years. If you want dependable guidance, sign up for the free Money Talks Newsletter. It takes 10 seconds, and there is no fluff or spam.

4. Compare the target with what you have

Now for the hard part. Add up everything you have set aside for retirement: your 401(k), IRA, taxable brokerage accounts, and anything else you would reasonably use to pay the bills.

Then compare that total with your target.

If you are behind, you are not alone. Based on Fidelity Investments data reported by Kiplinger, the average 401(k) balance reached a record $155,800 in the second quarter of 2026. Among savers who had stayed in the same plan continuously for 15 years, the average balance was $668,900.

There are people out there who have built substantial wealth. There are also many people who simply have not checked the numbers yet.

As a rough benchmark, Fidelity says you should aim to have eight times your salary saved by 60 and 10 times by 67. It is not a rule carved in stone — just a useful reality check.

5. Decide what to do next

At this point, you know where you stand. You are either on track, ahead, or behind.

If you are behind, you really have only three levers: save more, spend less in retirement, or work longer. Staying employed two or three extra years can help in several ways at once — you keep contributing, your investments have more time to grow, and you shorten the retirement period you need to fund.

Catch-up contributions can also help. Savers age 50 and older can contribute an extra $8,000 to a 401(k) on top of the regular limit. Workers ages 60 to 63 get an even larger catch-up contribution of $11,250 under the Secure 2.0 Act.

If you are ahead, that is great — but keep checking the numbers. Sequence-of-returns risk, which means a market decline early in retirement, can do serious damage if it happens in the first few years.

After 10 years on Wall Street and more than 30 years writing books and answering questions like this one, I have learned this much: nobody can promise a retirement so secure that you will never worry. What you can do is calculate the numbers, assess what you have, and make adjustments. That is the whole game.

Do not guess. Do not avoid it. Run the numbers. The couple who sat across from me all those years ago wanted certainty. What they really needed was a plan. So do you.

For more on the spending side of retirement, see “5 Steps to Ensure Your Money Lasts Through Retirement.”