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Benchmarks that can show you’re financially ready for retirement

Do your savings add up?

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By:
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Mark Huffman
Reporter

Mark Huffman has covered consumer issues since 2004, with a special focus on protecting and empowering older adults. A former news correspondent for the Associated Press Radio Network, Westwood One, and ConsumerAffairs, Mark brings decades of journalistic experience to RetirementLiving.com. He is passionate about giving consumers a voice and helping them make informed decisions. Mark has also created educational content, including Senior Scam Alert, a video resource designed to help seniors recognize and avoid fraud. He holds a B.A. from the University of Kentucky and lives with his family in Richmond, Virginia.
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Photo by Sarah Sheedy on Unsplash

Key Insights

  • Debt-free living: Entering retirement with little to no high-interest debt is a strong indicator of readiness.
  • Sustainable savings: Having 25 times your expected annual expenses set aside is a widely used benchmark.
  • Healthcare coverage: A clear plan for medical costs, including Medicare and supplemental insurance, is essential.

For many Americans, retirement readiness feels like a moving target. Rising life expectancy, market volatility, and healthcare inflation make it difficult to know exactly when it’s safe to step away from a paycheck. 

But financial experts agree on several benchmarks that can help clarify the picture. Here are five things that can provide some clarity:

1. Savings that match your lifestyle

One of the most common rules of thumb is the “25x rule”: retirees should have at least 25 times their anticipated annual spending saved before leaving the workforce. For example, someone who expects to spend $60,000 per year in retirement should aim for a nest egg of about $1.5 million. This benchmark is tied to the “4% rule,” a guideline suggesting that withdrawing 4% of savings annually can support a 30-year retirement without depleting funds.

2. Eliminating costly debt

Carrying large balances into retirement can erode financial security. Credit card debt, personal loans, or even high-interest car loans eat away at fixed incomes. Experts recommend entering retirement either debt-free or with only manageable, low-interest obligations like a small mortgage. Without monthly debt payments, retirees can better stretch their savings.

3. Reliable income streams

Social Security, pensions, annuities, and passive income sources, such as rental properties, are crucial pieces of the retirement puzzle. Financial planners suggest confirming that guaranteed income will cover at least 60–70% of your essential expenses. This reduces the pressure on investment withdrawals, particularly during down markets.

4. Healthcare preparedness

Healthcare is often one of the largest expenses in retirement. Beyond Medicare, retirees may need supplemental insurance or a dedicated health savings account (HSA). A 2024 Fidelity study estimates that the average couple retiring at age 65 will need around $315,000 for healthcare costs throughout retirement. Having a plan for these expenses is a strong indicator of readiness.

5. A Practice run at retired life

Finally, experts recommend testing your retirement budget before you actually retire. Living on your projected financial post-retirement income for six to 12 months can highlight gaps, lifestyle adjustments, and unexpected costs. If you can comfortably maintain your desired lifestyle during this trial period, you’re likely ready to retire.