How do I know if I have saved enough to retire?

Work out what you spend in a year, subtract the income that arrives whether or not you work (Social Security, any pension or annuity), and you have the gap your portfolio must cover. Divide that gap by roughly 4% — multiply by 25 — for a first estimate of the portfolio it takes. It is an estimate, not a threshold, and it is most sensitive to the spending figure you started with.

I am 55 with $300,000 saved. Am I behind?

Behind what? There is no universal schedule, because the answer depends entirely on what you spend. $300,000 supports a person spending $30,000 a year very differently from one spending $70,000. The rules of thumb that say "eight times salary by 60" are anchored to income, and you retire on spending, not income.

What is the fastest way to check whether retirement is affordable?

Look up your actual spending for the last twelve months from your bank and card statements rather than estimating it. Almost everyone estimates low, and since every other number in the calculation is derived from that one, an error there propagates through everything else.

Does affording retirement mean never running out of money?

No plan is certain, so the practical question is how much room for bad luck it has. That is what a probability of success measures: how many simulated futures the money outlasted. A plan that survives most futures and fails in some is normal, and knowing which levers move it is more useful than chasing certainty.

How to tell whether you can actually afford to retire

Not a savings target. Three numbers — what you spend, what arrives without you working, and what the gap costs — and a way to check them in about ten minutes.

Most people ask this as a savings question — have I got enough in the account? — and it cannot be answered in that form. Enough is not a quantity. It is a relationship between three things: what you spend, what arrives whether or not you work, and how long the difference has to last.

The useful version of the question is therefore not “do I have enough?” but “what does my spending cost, and can my portfolio carry the part nothing else covers?” That one you can actually answer, in about ten minutes, with numbers you already have.

Start with what you spend, not what you have saved

Nearly everyone knows their portfolio balance to the dollar and their annual spending only vaguely. That is exactly backwards, because the spending figure is the one that drives everything else — and estimates of it are almost always low.

So do not estimate. Add up twelve months of actual outflow from your bank and card statements. Include the irregular things people leave out when guessing: the insurance premiums, the car repair, the dental work, the flights for the wedding. If you want a shortcut, take a year of total money out and subtract what went into savings — that difference is what your life costs to run.

Then adjust for the things that genuinely change at retirement. The commute and the work clothes go. The retirement savings contributions stop, which is a large one people forget. Health insurance may go up sharply before Medicare at 65. Travel usually rises in the first years and falls later.

The three-number test

With annual spending in hand, the rest is arithmetic:

Annual spending. The number you just built.
Income that arrives anyway. Social Security, plus any pension or annuity. This is income you receive whether or not markets cooperate, which is what makes it different in kind from a portfolio.
The gap. Spending minus that income. This is the only part your savings has to cover.

For a first estimate of the portfolio that gap requires, multiply it by 25 — the inverse of a 4% withdrawal rate. Someone spending $60,000 a year with $24,000 arriving from Social Security has a $36,000 gap, and $36,000 × 25 is $900,000.

Two warnings about that multiplication, both important. It is an estimate rather than a threshold: 25× is a convention with real assumptions behind it, discussed in how much you actually need. And it quietly assumes your Social Security has already started, which for anyone retiring before 67 it has not — see the gap problem below.

Why “am I behind?” has no answer as asked

Behind whom? The rules of thumb — three times salary by 40, eight times by 60 — are anchored to income, and you do not retire on your income. You retire on your spending. Two people earning the same salary, one spending 45% of it and one spending 85%, need portfolios that differ by roughly a factor of two, and the rule of thumb gives them the same target.

The multiples are not useless — they are a rough population-level nudge for someone with no other information. But once you know your own spending, they are strictly worse than the three-number test above, because they are answering a question about the average person instead of the question about you.

The part the arithmetic hides: retiring before 67

The 25× estimate assumes the portfolio only ever covers the gap. If you stop working before Social Security starts, then for those years the portfolio covers everything — and those are the most dangerous years in the plan, because a market fall while you are drawing at full rate does damage that later gains cannot fully undo.

This is most of why retiring at 62 is so much harder than retiring at 67, and it is why our can-I-retire pages give the gap its own section on every page below 67. The mechanism is explained in sequence-of-returns risk.

What actually moves the answer

If the three-number test comes out short, the levers are not equally powerful, and they are not the ones most people reach for first. Saving dramatically more in the last few years moves the answer least. In rough order of force:

The date. Working one more year shortens the drawdown and lengthens the accumulation at the same time. It is usually the single strongest lever available.
The spending floor. Separating essential from discretionary spending means a bad market year can cut the second without touching the first. Flexibility is worth more than it sounds.
When you claim Social Security. Delaying raises an inflation-adjusted income that lasts as long as you do — covered in claiming at 62, 67, or 70.
Any earned income early on. Part-time work in the first few years relieves exactly the drawdown that does the damage, and is worth far more than the same money later.

Getting your own number

The three-number test is a screening tool. It tells you roughly where you stand; it does not tell you how much room for bad luck the plan has, because it assumes a single average future and you will not get one.

For that, run the same inputs through a simulation — ours is free and takes about two minutes, with every assumption published. If you would rather see the shape of it before entering anything, can I retire? has 42 combinations of age and portfolio already worked out, each at three spending levels — which will also show you, immediately, how much of this depends on the spending number you started with.