How much annual income can my savings generate?

Even if you are still adding money to an IRA or 401(k), you should already have a solid idea of the savings balance you may retire with. From there, the next step is to estimate how much annual income those savings can realistically produce.

That calculation begins with a withdrawal rate. If your portfolio is made up of roughly equal portions of stocks and bonds, the well-known 4% rule may be a reasonable starting point. If your investments are more conservative, then your withdrawal rate should generally be lower as well.

For example, if you retire with $2 million and follow the 4% rule, your savings could provide about $80,000 per year. You would then need to determine whether that amount, together with your expected spending and any other income, will be enough.

When will I claim Social Security?

Social Security can be a major part of retirement income even for people with substantial savings. For anyone born in 1960 or later, full retirement age is 67, which is when benefits are available without a reduction.

You may start claiming Social Security as early as age 62. However, taking benefits before full retirement age reduces the monthly amount. On the other hand, waiting beyond full retirement age increases benefits by 8% per year until age 70.

Knowing when to file matters because it directly affects how much you will receive each month. With that figure in hand, you can combine it with projected withdrawals from savings to see whether your retirement income will cover your expected expenses.

What will I do about healthcare?

Many people lose access to employer health coverage after retirement. If you will be 65 or older at that point, you should be eligible for Medicare. If not, you will need to decide where your coverage will come from.

COBRA may be worth considering if you are close to age 65 and can handle the cost. It allows you to keep your employer plan, but without the employer-subsidized premiums, which can make it very expensive. If you still have several years before Medicare begins, an ACA plan may be another option, especially if your income is low enough to qualify for a subsidy.

What will I do with my time?

You may be looking forward to no longer waking up early every day, commuting to the office, and dealing with traffic on the way home. But even if a slower pace sounds appealing, it is still smart to think ahead about how you will spend your time after retirement.

Some retirees discover they have too much free time, which can become frustrating. To avoid that, it helps to plan ahead for life after a full-time job. You might choose to learn a new sport, volunteer, or work part-time.

If you are nearing the finish line for your career, the final stretch may feel especially exciting. But before you celebrate retirement, make sure these key questions are answered so your plan does not have any major gaps.