No two retirements are alike. Whether you’re planning to stop working in 2025 or still have a few years left, your financial readiness likely falls into one of three categories: you’ve saved enough, you’re almost there, or you’re significantly behind. Each situation calls for a different strategy — and understanding where you stand is the first step to retiring on your own terms.
Scenario 1: You’ve Saved Enough — The Best-Case Outlook
If you’ve diligently contributed to retirement accounts, invested wisely, and paid off major debts like your mortgage, you may be in the enviable position of being financially ready to retire. But how do you know “enough is enough”?
A common rule of thumb is that you’ll need 70–80% of your pre-retirement income to maintain a comfortable lifestyle. To generate that income, financial advisors often reference the 4% rule — a strategy that assumes you can withdraw 4% of your retirement portfolio annually with minimal risk of running out of money over 30 years.
Let’s say you need $60,000 annually and expect $25,000 from Social Security and $15,000 from other sources like a pension. That leaves a $20,000 gap. According to the 4% rule, you’d need $500,000 in retirement savings to safely cover that shortfall.
In this best-case scenario, you’re not just surviving — you have flexibility. You can spend on travel, hobbies, or family without worrying about every dollar.
Scenario 2: You’re Close — The Medium-Case Reality
Many Americans find themselves here: on the cusp of retirement, but not quite where they’d like to be. Maybe you’ve saved a few hundred thousand dollars, but it won’t quite cover the gap between what you’ll need and what guaranteed income sources like Social Security can provide.
If this is your situation, you still have options:
- Delay Retirement: Working even a few more years can have a powerful effect. It allows you to save more, gives investments time to grow, and shortens the number of years you’ll draw down your savings.
- Part-Time Work or Semi-Retirement: Reducing your hours or taking on freelance or gig work can bring in additional income while preserving your nest egg.
- Cut Expenses: Downsizing your home, relocating to a lower-cost area, or reducing discretionary spending can stretch your savings much further.
The goal in this scenario is not just to delay retirement but to strengthen your financial foundation so retirement becomes sustainable — not stressful.
Scenario 3: You’re Not Ready — The Worst-Case Challenge
If you haven’t saved much — or anything at all — retirement might feel out of reach. But all is not lost. Millions of Americans are in the same boat, and there are practical steps you can take to improve your outlook.
Here’s what to consider:
- Postpone Retirement: If you’re able to work longer, even part-time, it gives you time to save and avoid depleting Social Security too soon.
- Delay Claiming Social Security: Waiting until age 70 increases your monthly benefit by as much as 77% compared to claiming at 62.
- Explore Creative Income Solutions: Renting a room, moving to a more affordable location, or tapping into skills to earn side income can all supplement your resources.
- Access Home Equity: Downsizing or using a reverse mortgage (with caution) can unlock value from your home to fund your retirement.
No matter how far behind you feel, the key is to take action — and not assume it’s too late. Even modest changes in savings, spending, or income strategies can make a big difference over time.
