These 3 easy benchmarks can help you find out if you’re really ready to retire. Have you met them yet?

Vishesh Raisinghani

Wed, August 19, 2026 at 3:25 PM GMT+3 6 min read

JPM +0.63%

halfpoint/Envato

Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.

Deciding when you can afford to retire would be a lot easier if there were one savings number that guaranteed you were ready. There isn't.

But there are a few benchmarks that can help you figure out where you stand. Looking at how much income your savings can generate, how your nest egg compares with common retirement targets and when you can access your money without an early-withdrawal penalty can give you a clearer picture of whether you're financially ready to stop working.

Must Read

Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one
JPMorgan sees gold hitting $5,000/oz by Q4 — and savvy investors are protecting their wealth with a tax-advantaged Gold IRA. Get your free guide from Priority Gold
The tax breaks in Trump's 'big beautiful bill' expire after 2028. Here are 4 moves to make before the window closes

That matters because even a seven-figure nest egg can look very different depending on how much you expect to spend, when you retire, the income you'll receive from Social Security or a pension and how long your savings need to last.

And those expenses can add up quickly. Households headed by someone 65 or older spent an average of $61,432 in 2024, according to an analysis of Bureau of Labor Statistics data. Housing alone accounted for more than $22,000 of that annual spending (1).

So before you decide whether you've finally saved enough to retire, here are three common benchmarks that can help put your retirement readiness to the test.

1. Put your savings to the 4% test

The first principle worth considering when planning your retirement is the 4% rule. The guideline calls for withdrawing 4% of your savings in your first year of retirement, then adjusting that amount for inflation in subsequent years, with the goal of making your money last for roughly 30 years.

While the 4% rule isn't a perfect fit for everyone (some retirement experts argue that retirees should use more flexible withdrawal strategies that account for factors such as market performance, spending needs and life expectancy), it remains a widely used starting point to determine how long your savings might last. That's because it offers a simple way to estimate how much annual income your savings might provide and whether your current nest egg is in the ballpark of what you'll need.

For instance, if you have $500,000 saved, a 4% initial withdrawal would provide $20,000 in the first year. With $2 million saved, that figure would rise to $80,000.

The more important question is whether that income, combined with Social Security, a pension or other sources of retirement income, would be enough to support your expected lifestyle.

Consider working with a professional

Rather than basing your retirement decision on general rules of thumb alone, it could be worth working with a qualified financial professional who can help you build a plan around your savings, spending needs and retirement timeline.

Research from Envestnet found that people who work with a financial advisor reported better financial outcomes than those who don't, including greater progress toward their financial goals and stronger confidence in their ability to handle unexpected expenses. The research also found that advised investors were more likely to feel on track for retirement (2).

For those approaching retirement, professional guidance can help turn broad benchmarks like the 4% rule into a withdrawal and investment strategy based on their own finances.

But hiring an advisor can be a lifelong commitment, which might make or break your retirement. That's why finding reliable advisors is crucial.

That's where Advisor.com can come in. The platform connects you with an expert near you for free.

Advisor.com does the heavy lifting for you, vetting advisors based on track record, client ratios and regulatory background. Plus, their network comprises fiduciaries, who are legally required to act in your best interests.

Just enter a few details about your finances and goals, and Advisor.com's AI-powered matching tool will connect you with a qualified expert best suited for your needs based on your unique financial goals and preferences.

Finding the right advisor isn't always easy — there's no one-size-fits-all solution. That's why Advisor.com lets you set up a free initial consultation, with no obligation to hire, to see if they're the right fit for you.

Once you've got the right financial advisor in your corner, the next step is getting a clear picture of where your money's actually going. That starts with the basics — budgeting and tracking your spending.

Diversify your investments for better protection

While many retirees know about and use IRAs for their savings, fewer leverage IRAs for investing in commodities.

With a gold IRA, you can get similar tax benefits to other IRA accounts, while investing in safe-haven assets that have less volatility than the stock market.

For example, while the market crashed in 2008, gold prices rose, cushioning the portfolios of investors who were savvy enough to diversify. And despite its recent pullback, the price of gold has appreciated over 140% over the past five years, according to Forbes (3).

One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.

Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainty.

To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver on qualifying purchases.

2. Compare your savings with what you expect to spend

It can be tempting to measure your retirement readiness against one big savings target. A Northwestern Mutual survey found that Americans believe they need $1.46 million to retire comfortably (4).

But for many, that number isn't realistic, and not always necessary. This is why it's important you build a retirement goal that's based on the advice of a qualified financial advisor who understands your goals and budget.

But there is no universal amount you need to have saved before you can retire. Someone expecting to spend $50,000 a year in retirement will have very different needs from someone planning to spend $100,000 — and Social Security, pensions and other sources of income can reduce how much of those expenses must come from savings.

Instead, compare the income you expect to have in retirement with the expenses you expect to face. If Social Security and other guaranteed income won't cover your anticipated spending, your savings will need to make up the difference.

Invest effortlessly with everyday purchases

If you run the numbers and find that your expected retirement income falls short of what you expect to spend, you may need to continue building your savings before leaving the workforce.

For those who still have time before retirement, investing can offer the potential for long-term growth, though it also comes with the risk of losses. Broad-based funds such as index funds and ETFs can spread your money across hundreds or even thousands of investments, helping reduce the risks that come with concentrating your portfolio in a small number of companies.

And building your investment portfolio doesn't necessarily require making large contributions all at once. Smaller amounts invested consistently can add up over time.

With platforms like Acorns, every purchase on your debit or credit card is automatically rounded up to the nearest dollar, with the excess placed into a smart investment portfolio. This way, even the most essential spending translates to money saved for the future by investing in low-cost ETFs.

The best part? You can get a $20 bonus investment when signing up with a recurring monthly contribution.

3. Use the rule of 55 to your advantage

Having enough money saved is one thing. Being able to access that money without an early-withdrawal penalty is another, particularly if you're hoping to retire before age 59½.

Generally, withdrawals from a 401(k) before age 59½ can trigger a 10% additional tax on top of the ordinary income taxes you may owe. But an exception known as the "rule of 55" can allow some workers to tap their workplace retirement savings sooner.

If you leave your job during or after the calendar year you turn 55, you may be able to take withdrawals from that employer's qualified retirement plan without paying the additional 10% early-withdrawal tax. The exception generally applies to the plan associated with the employer you just left, not to IRAs.

That makes access to your savings another important benchmark when considering an early retirement. You may have enough money on paper, but retiring before you can access it efficiently could change how much you'll actually have available to live on.

Deal with your debt head-on

It also might not be beneficial to retire early if you're still paying off debts. To make sure you're in the best possible position when that time comes, you'll want to have settled as many of your outstanding debts as possible.

Two common strategies for paying down debt are the avalanche and snowball methods.

With the avalanche method, you make minimum payments on all your debts while putting extra money toward the debt with the highest interest rate. Once that balance is gone, you move to the debt with the next-highest rate. Because you're attacking the most expensive debt first, this approach can reduce the amount of interest you pay.

The snowball method takes a different approach. You start with your smallest balance and work your way up, regardless of the interest rate. That can provide a psychological boost as debts disappear, although you could ultimately pay more in interest.

If neither approach feels manageable because you're juggling several high-interest debts, consolidation is another option to consider. You can use a free service called Credible to consolidate your debts into one monthly payment.

Rather than worry about multiple bills that each have their own minimum payments, deadlines and interest rates, you can take out a new loan with a lower interest rate and use it to pay off your other debts immediately.

You'll then only have to make a single payment each month, and the lower rate will potentially save you a huge amount in interest — more money that you'll be able to set aside for retirement.