Are You Ready to Retire?
Retirement is not just a financial milestone—it’s a deeply personal journey shaped by your lifestyle, health, family, and aspirations. As more Americans, approach retirement, the question “Am I ready to retire? "becomes increasingly urgent. This article explores key strategies and considerations to help you prepare for a more confident and sustainable retirement.
Step 1: Understand Your Retirement Landscape
Key Questions to Ask Yourself
- How long will I live?
Life expectancy has increased significantly. For Americans, the average is around 75 for men and 81 for women1, but many live well beyond these averages. Couples should also consider age gaps and plan for the surviving spouse’s financial needs. - How much will I spend?
As of 2023, the U.S. Bureau of Labor Statistics, retirees aged 65+ spend approximately $60,087 annually. However, spending often increases with age due to healthcare and lifestyle changes. - Have I saved enough?
To sustain a $60,000 annual income over 30 years with 3% inflation, you may need upwards of $2.8 million. This underscores the importance of strategic planning and diversified income sources.
Step 2: Cover Essential Expenses with Dependable Income
Essential expenses—housing, food, insurance—should ideally be covered by guaranteed income sources, such as:
- Social Security
- Pensions
- Fixed annuities
These sources can offer stability and may include cost-of-living adjustments. Market-based sources like CDs, government securities, and variable annuities can supplement income but are subject to interest rate fluctuations.
Step 3: Build a Resilient Retirement Portfolio
A sound retirement portfolio balances three core principles:
- Downside Risk Management: Protect against market volatility, especially early in retirement.
- Income Generation: Shift focus from growth to income-producing assets.
- Growth and Inflation Protection: Maintain exposure to growth assets to preserve purchasing power over time.
Step 4: Use the Bucketing Strategy
Segment your retirement assets into three “buckets”:
- Near-Term Bucket: Cash-like investments for immediate expenses (6 months to 2 years).
- Medium-Term Bucket: Stable, liquid investments for the next 3–5 years.
- Long-Term Bucket: Growth-oriented investments for future needs and inflation protection.
This strategy may help manage sequence-of-return risk and help provide psychological reassurance during market downturns.
Social Security: Myths, Facts, and Timing
- Myth: Social Security will cover all retirement expenses.
Fact: As of January 2025, the Social Security Administration reports the average monthly benefit is approximately $1,976, below the typical retirement budget.
- Myth: Social Security is tax-free.
Fact: Up to 85% of benefits may be taxable depending on your income.2
Claiming at 62 reduces benefits by up to 41%.2
Delaying until 70 can increase benefits by 8% per year past full retirement age.
Important Retirement Milestones
Age | Milestone |
50 | IRA/401(k) catch-up contributions begin |
591/2 | Penalty-free withdrawals from retirement accounts |
62 | Early Social Security eligibility |
65 | Medicare enrollment begins |
66–67 | Full retirement age for Social Security |
70 | Maximum Social Security benefits |
73 | Required Minimum Distributions (RMDs) begin |
Final Thoughts: Your Retirement, Your Way
Retirement readiness is not a one-size-fits-all equation. It requires thoughtful planning, honest reflection, and knowledgeable guidance. Whether you're just starting to plan or nearing retirement, working with a financial advisor can help you navigate the complexities and build a strategy tailored to your financial goals.
1 https://www.cdc.gov/nchs/fastats/life-expectancy.htm
2 https://www.ssa.gov/benefits/retirement/planner/agereduction.htmlReady to learn more? Get started by
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Read more articles by Connell Lee