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Retirement is meant to be the reward after years of hard work—the time when you can finally pursue your passions and enjoy life on your own terms. But is reality going to live up to your dreams?
Many Americans find their retirement expectations don't match the reality. In fact, the 2024 Retirement Confidence Survey showed that only 68% of workers feel financially prepared to retire comfortably.
So, how can you ensure that you've covered all your bases? How can you know if you're truly retirement-ready?
Being retirement-ready means having the savings, income streams, and plans in place to maintain your desired lifestyle. This goes beyond having a certain amount in your retirement accounts.
Retirement readiness reflects your overall financial health and preparedness to thrive in your post-work years without money worries. Evaluating it takes a holistic look at your finances, not just your account balances.
As you approach retirement age, consistently evaluating your preparedness is crucial. Here are three assessments every pre-retiree should master:
The 4% rule provides a guideline for how much you can safely withdraw from your retirement savings each year. Here's how it works:
For example, a $1 million portfolio allows up to a $40,000 first-year withdrawal.
The 4% rule aims to provide steady lifetime income from your savings while preserving the balance. But several factors impact its effectiveness, like market performance and your personal situation.
Debt obligations impact how much you need to save and withdraw. To understand your situation, create a detailed debt inventory:
Financial experts recommend keeping this ratio below 36%. If it's higher, focus on paying down high-interest debts first.
Having an overview of your debt and associated costs will help you budget for retirement. Debt takes a bite out of your available income, so minimizing it provides more cash flow.
Creating an income inventory helps ensure you have diverse, reliable income streams in retirement:
Having multiple income sources helps reduce over-reliance on any given one, providing a safety net if one falls through. For example, 70% of retirees depend heavily on Social Security. Make sure you have backup sources of funds.
This article has covered key assessments to evaluate your retirement readiness. But preparing for your later years goes beyond just assessments - you need a sound financial plan.
That's where Savvly comes in. Savvly offers an innovative solution designed to provide easy, affordable financial security in retirement.
Savvly is the world's first market-driven pension that can give you income for life at a fraction of the cost of an annuity. It's a new way to get additional funds in retirement when you need it most.
Ready to take control of your retirement? Try Savvly's free retirement planning calculator to see where you stand!
Now that you've learned key assessments, it's time to check your preparedness. Take this quick survey:
1 - Not very confident
2 - Somewhat confident
3 - Moderately confident
4 - Very confident
5 - Extremely confident
At what age do you expect to retire?
a) Before 60
b) 60-65
c) 66-70
d) After 70
e) I don't plan to retire
a) Saving enough money
b) Managing investments
c) Healthcare costs
d) Maintaining my lifestyle
e) Other (please specify)
a) Monthly
b) Quarterly
c) Annually
d) Every few years
e) I don’t have a retirement strategy
a) 401(k) or IRA
b) Social Security
c) Pension
d) Part-time work
e) Other (please specify)
Assumptions and Risk Disclosure
The information on this page is provided for educational purposes only and is not intended as investment, legal, or tax advice. It is designed solely to illustrate how longevity-based investment benefits may work under certain assumptions. Actual results will vary.
All illustrations, examples, and case studies are hypothetical and are intended to demonstrate potential scenarios—not to predict or guarantee actual outcomes. They do not represent the performance of any individual investor, portfolio, or account.
Key Assumptions Used in the Illustrations
- Life expectancy and mortality projections are based on the most recent Social Security Administration (SSA) tables available at the time of simulation.
- In the event of death or early withdrawal, hypothetical scenarios assume that beneficiaries may receive 75% of the lesser of the initial investment or current market value, plus 1% for each full year the account was active.
- Case studies assume standardized market growth of 8% annually and do not incorporate unexpected market volatility, inflation, changes in interest rates, or changes in an investor’s personal circumstances.
- Simulations may assume a 3% annual early withdrawal rate prior to payout or death.
- All figures shown are net of fees.
Risks to Consider
- Market Risk: Investment values will fluctuate and may be worth more or less than the amount invested. There are no guaranteed returns.
- Sequence of Returns Risk: The order and timing of market gains or losses—particularly near the payout phase—can materially affect results.
- Longevity Risk: Living longer than projected may reduce the pooled benefit per participant; shorter-than-expected lifespans may affect the amount received.
- Redemption Impact: Early or voluntary withdrawals by other participants can impact overall fund performance and distribution outcomes.
No forecast, projection, or hypothetical return should be relied upon as a promise or representation of future performance. Investors should carefully evaluate their own circumstances and consult a qualified financial professional before making any investment decision.
