Often, people feel retirement is far off, but it’s actually something that many people will come to face unprepared. A survey by the American Society of Pension Professionals & Actuaries (ASPPA) suggests that 56% of employees worry about outliving their retirement income and 61% struggle to calculate how long their savings should endure. This anxiety can stem from not knowing if they have enough savings or income.
But there are unmistakable clues that you may be more ready for retirement than you think. Knowledge of these signs will give you certain comfort in your financial future. In this article we take a look at the signs you are financially prepared for retirement.
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“The income you can generate from your assets is more important than how much you’ve saved,” said Stephen Kates, certified financial planner (CFP) and principal financial analyst at RetireGuide.com. “A key exercise before retirement is understanding where your money will come from and where it will go.”
Another signal that you’re financially prepared for retirement is having several sources of income. Social Security may not provide you with enough money to cover all of your expenses. In fact, the average Social Security benefit in 2024 is just $1,862 a month, according to U.S. News and World Report.
Kates also suggested investing in other sources of guaranteed income, such as annuities. Furthermore, investing in rental properties or dividend-paying stocks can also help give you some extra cash flow. If you already have these sources up and running, it means you are doing well in your planning for the future.
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How much you have saved against retirement is one of the best signs that you’re prepared. Most financial experts would tell you to save at least 10 to 12 times your annual income before you hit retirement. That means if you make $50,000 a year, you should save $500,000 to $600,000 for retirement. This kind of saving can give you a good platform on which to retire.
But this is good news if you have been putting some money into your retirement accounts regularly. One of the nice things about 401(k) and IRA plans is that many people use them to save for retirement. If you are adding to these accounts and doing it on a regular basis, then you aren’t taking your future too lightly.
