How Do I Know if I’m Actually on Track for Retirement?

Most people have that nagging feeling. You’re making decent money, you’ve got some savings, but is it actually enough? The truth is, you can’t just wing it and hope for the best when you’re thinking about retirement. You need to actually know where you stand.

Check Your Current Savings

Start by adding up everything you’ve got. This means your 401(k), IRA, brokerage accounts, and any other money you’re setting aside.

• Look at your account statements right now
• Write down the total balance in each account
• Be honest about the actual number (not what you think it should be)

It’s not the most exciting task, but it’s essential. You can’t hit a target if you don’t know where you’re starting from.

Do the Math on Your Target Number

Here’s what you need to figure out: how much money will you actually need when you stop working? This is where retirement planning gets real for most people.

A common rule is that you’ll need about 70 to 80 percent of your current income to live comfortably in retirement. So if you’re making $75,000 a year right now, you’d probably want somewhere around $52,500 to $60,000 annually when you’re retired.

• Calculate what 75 percent of your income is
• Multiply that by the number of years you might live in retirement (think 25 to 30 years)
• That’s roughly your target retirement number

For example, if you need $55,000 a year and want to account for 30 years, you’re looking at roughly $1.65 million. Sounds big, but your money will be working for you the whole time.

Look at Your Contribution Rate

Are you actually putting money away each month? And more importantly, is the amount meaningful?

A good target is to save 10 to 15 percent of your gross income. If you’re doing that consistently, you’re on the right track. If you’re saving less than 5 percent, you’re probably not going to hit your number.

• Check how much you’re contributing to retirement accounts monthly
• See if your employer offers matching benefits (and use them)
• Consider bumping up contributions if you’re falling short

Factor in Social Security

Don’t forget about this. Social Security will be part of your retirement income. You can check your statement online to see what the government estimates you’ll get.

Most people get their first payment around age 67, but it depends when you claim. Your age matters here.

• Visit ssa.gov to create your account
• Check your estimated monthly benefit
• Subtract this from your target income to see your real gap

Consider Your Lifestyle

Retiring at 55 looks completely different from retiring at 70. The longer you work, the less money you actually need set aside.

If you’re hoping to retire early, your target number goes up. If you’re planning to work longer, it goes down. That’s just how it works.

Take Action

Knowing you’re off track is actually good news because you can do something about it. You can increase contributions, work a few extra years, or adjust your retirement timeline. But you have to actually look at the numbers first.

Don’t wait another month to check where you really stand. Most people find out they’re doing better than they thought, or they get the wake-up call they needed to make a change.