Are You Actually Ready for Retirement? How to Grade Your Plan and Fix What’s Missing

If I asked you to grade your retirement readiness right now, what would you say? An A? A C? Or would you quietly admit it feels more like an F?

Recent retirement confidence surveys show a troubling trend. Roughly 70% to 75% of Americans say they feel at least somewhat behind on retirement savings. Only about 20% say they feel very confident they’ll have enough money to retire comfortably. That means the majority of households are operating with uncertainty about their financial future.

Retirement readiness isn’t just about how much you’ve saved. It’s about whether you understand your numbers, have a strategy, and know how your money will support you for decades.

The first place I always start is budgeting and cash flow. Most people can tell me what they earn annually, but far fewer can tell me exactly what they spend each month. Without knowing your net pay and your actual expenses, retirement planning becomes guesswork. Tools and apps make tracking easier than ever, but the discipline of knowing your spending is what truly matters. If you don’t understand your cash flow today, it’s nearly impossible to project it into retirement.

Next, we evaluate net worth. Your net worth includes liquid assets like retirement accounts, brokerage accounts, savings, and cash. It can also include personal assets like home equity. But here’s the key distinction: not all assets are equally usable for retirement income. A paid-off home adds stability, but unless you plan to sell or borrow against it, it doesn’t generate income. Liquid assets are what fuel retirement withdrawals.

When it comes to savings benchmarks, the gaps are clear across generations. Federal Reserve data shows Baby Boomers hold the highest average retirement balances, often exceeding $400,000 depending on age cohort. Generation X households average closer to $200,000 to $250,000 in retirement accounts. Millennials, now in their late 20s to early 40s, are often in the $100,000 range or below depending on age. Gen Z is just beginning to build savings, with balances typically far lower but growing faster thanks to early investing habits.

These averages don’t tell the whole story, but they highlight a critical point: many Americans are underprepared relative to how long retirement may last.

So how do we fix that?

First, set a target. Decide when you want to retire and estimate what you’ll need annually in today’s dollars. Then factor in inflation. A retirement that costs $80,000 per year today could require significantly more in 20 years. Once you know your goal, automate your savings. Pay yourself first. Maximize employer matches in 401(k) plans. Contribute bonuses and raises rather than absorbing them into lifestyle inflation.

Asset allocation is the next pillar of retirement readiness. A balanced portfolio often includes U.S. stocks, international stocks, bonds, and cash equivalents. A commonly cited moderate allocation might be 60% stocks and 40% bonds, with the equity portion split between U.S. and international markets. Younger investors can typically afford a more aggressive allocation, leaning heavier into equities for long-term growth. As retirement approaches, reducing volatility becomes more important.

That said, age alone should not dictate allocation. Risk tolerance, withdrawal needs, and guaranteed income sources all matter.

Withdrawal strategy is equally critical. The classic 4% rule suggests that withdrawing 4% annually from a diversified portfolio has historically supported a 30-year retirement in many market environments. For example, withdrawing $40,000 annually from a $1 million portfolio. However, this rule is a guideline, not a guarantee. Market conditions, portfolio composition, and flexibility in spending all influence sustainability. Higher withdrawal rates, such as 6% or 7%, significantly increase the probability of depleting assets prematurely, especially during early market downturns.

Rebalancing is another overlooked discipline. If your target allocation is 60% stocks and 40% bonds, market growth may push you to 70/30 over time. Rebalancing means trimming winners and adding to underperforming assets to restore the intended risk level. Many investors do the opposite they panic during downturns and abandon their strategy. That emotional reaction often does more harm than the market decline itself.

Investment fads can also derail long-term planning. Take I Bonds, for example. In 2022, Series I Savings Bonds briefly paid rates above 9% due to elevated inflation. Today, rates are significantly lower, reflecting changes in inflation and fixed-rate components. I Bonds can be useful for short- to intermediate-term savings goals or inflation protection, but they are not a long-term replacement for equities when growth is required. Choosing between bonds and stocks should be based on your time horizon and financial objectives, not just current headline yields.

Ultimately, retirement planning is not about chasing the highest return or copying someone else’s allocation. It is about building a comprehensive plan first, then designing a portfolio to support it.

Ask yourself:
Do I know my monthly spending?
Do I understand my net worth and which assets generate income?
Is my asset allocation aligned with my risk tolerance and retirement timeline?
Have I established a sustainable withdrawal strategy?

Retirement security doesn’t happen by accident. It happens by design.

If you haven’t graded your retirement plan yet, now is the time. The earlier you identify gaps, the more flexibility you have to fix them.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.