When can you actually retire and is early retirement possible? Your retirement date should not be based only on reaching age 65 or saving $1 million. It should be calculated using your income-producing assets, expected retirement expenses, guaranteed income and the number of years your money may need to last.
Two people with the same $1 million portfolio can experience completely different retirements. Someone who spends $40,000 per year, receives Social Security and owns a paid-off home may be able to make that money last for decades. Someone spending $120,000 annually, retiring before Medicare eligibility and carrying debt may place significant pressure on the same portfolio within only a few years.
Age alone can also be misleading. Turning 65 generally determines Medicare eligibility, but it does not confirm that your savings and retirement income can support you throughout retirement.
Your Social Security claiming strategy is another important consideration. Benefits may begin as early as age 62, but claiming before full retirement age generally results in a permanently reduced monthly benefit. Delaying benefits beyond full retirement age can increase your monthly payment until age 70. For married couples, this decision may also affect the survivor benefit available to the remaining spouse.
Rather than guessing, calculate your retirement readiness using four essential numbers.
Your Income-Producing Retirement Assets
Calculate the assets that can realistically generate retirement income, including:
- 401(k) and 403(b) accounts
- Traditional and Roth IRAs
- Taxable brokerage accounts
- Cash savings
- Health Savings Account funds allocated to healthcare
Do not automatically include your home unless you genuinely plan to sell it, downsize or use its equity. Cars, collectibles and anticipated inheritances should also be excluded unless they can reliably support retirement spending.
Project the future value of these assets using conservative growth assumptions rather than relying on optimistic investment returns.
Your Expected Retirement Spending
Estimate what you will realistically spend each year after retiring. Do not rely only on a general assumption, such as needing a fixed percentage of your current income.
Your retirement budget should include regular and occasional expenses such as:
- Housing and utilities
- Food and transportation
- Healthcare and insurance
- Taxes and debt payments
- Travel and personal spending
- Home repairs and vehicle replacements
Using actual tracked expenses can provide a more reliable estimate of how much retirement income you will need.
Your Guaranteed Retirement Income
Guaranteed income is money that may continue arriving regardless of short-term stock-market performance. It can include:
- Social Security benefits
- Pension income
- Annuity payments
- Reliable net rental income
Knowing how much guaranteed income you will receive helps determine how much must be withdrawn from your investment portfolio each year.
How Long Your Money Must Last
Your retirement plan should account for longevity. Planning for your income and assets to last until approximately age 95 may be particularly important for couples because one spouse may live considerably longer than expected.
Underestimating longevity increases the risk of running out of money later in life, when returning to work or rebuilding savings may no longer be realistic.
How to Calculate Your Retirement Income Gap
Subtract your expected annual guaranteed income from your estimated annual retirement spending.
Annual retirement spending − guaranteed income = annual income gap
The remaining amount is what your investment portfolio must provide each year.
Next, divide that annual income gap by the value of your income-producing assets. This produces your estimated portfolio withdrawal rate.
Your withdrawal rate helps indicate whether your retirement plan may remain sustainable throughout the expected length of your retirement. A withdrawal strategy that may work for 20 years could become less sustainable if the portfolio must support 30 years or longer.
Finally, compare what happens when you retire now, in two years or in five years. Additional working years can provide more savings, further investment growth, fewer years of withdrawals and potentially higher Social Security income.
However, there may eventually be a point when working another year makes only a limited difference to your long-term financial security. Identifying that point can help determine your realistic target retirement date.
If this is your first time with me, I’m Elizabeth.
• I help women navigate taking over the finances after widowed, divorce or illness
• I help people comfortably retire 10 years early
• We provide sustainable, predictable income in retirement
• $200 million and thousands trust us with their retirement planning (as of 8/1/2026)
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