A Simple Way To Check Your Retirement Readiness

Retirement planning can feel like trying to hit a moving target. How much is "enough"? Should you be worried? Below, we'll give you a simple method—a three-number check—that many savers say changes how they think about retirement. The best part? You can do it in less time than it takes to order your morning coffee.

Key Takeaways

• Checking your retirement readiness doesn't require complex math—just three numbers can tell you where you stand.
• Regular 10-minute checkups using this method can help you spot shortfalls years before they become problems.
• Even small adjustments to your savings rate today can dramatically improve your retirement outlook tomorrow.

Your 3-Number Check

Here are the three numbers that tell you where you stand:

1. Your “multiple”: Over time, retirement experts have formulated a number for each life decade that you multiply by your annual salary to get the total you’ll want to set aside by the end of that decade—your 20s, 30s, and so on. (See the table below.) For example, by the end of your 40s, you should have about three times your salary saved for retirement. In your 50s? That target moves to 6x your salary.

2. Your monthly gap: Financial advisors often suggest aiming for 80% of your present income in retirement. If you make $6,000 monthly now, that means you’d want $4,800 a month in retirement. If you haven’t already, go to SSA.gov, where you can quickly look up your expected Social Security benefit. Take that number and subtract it from 80% of your monthly income. If Social Security is expected to give you $2,000 a month, your “gap” is $2,800. Your retirement savings will need to cover this.

3. Your emergency buffer: This is the number of months your emergency savings can cover basic expenses. Research shows what common sense tells you: If you have emergency savings, you won't need to stop saving toward your retirement goals when the unexpected happens. Aim for six months, but even three months puts you ahead of about half of Americans.

Together, these tell you where you stand (the multiple), how much you'll need (the monthly gap), and how protected you will be while getting there (the emergency buffer).

Warning Signs and Quick Fixes To Stay on Track

Here are the red flags that financial advisors say deserve more immediate attention:

1. Your multiple is off: If you're more than one "multiple" behind for your age (like having twice your salary saved when it should be 3x), it's time to make adjustments. Don't panic: this is common, and it's fixable.
2. Your monthly gap is more like a canyon: If the gap is more than 50% of your income, you'll need to boost savings significantly or start thinking about changes to your retirement lifestyle. Experts say successful future retirees keep it under 40%.
3. Your emergency buffer is too thin: Having less than three months of expenses saved puts your entire retirement plan at risk. Without this cushion, you're more likely to tap into retirement savings when emergencies strike.

The good news? Even small changes can dramatically improve your retirement readiness. Here's what top financial planners recommend:

1. Capture "found money": Put every raise, bonus, or tax refund toward your retirement before you get used to spending it. Even a 1% increase in your retirement contributions can add thousands to your nest egg.
2. Mind the gap: Consider what financial advisors call the "bridge strategy"—working part-time for the first few years of retirement. Even earning $1,000 a month reduces your gap by that amount, making your savings last longer.
3. Build your buffer: You might automatically transfer just 1% from each paycheck to emergency savings. It's small enough that you won't feel it, but it adds up fast.

The Bottom Line

The key is to make quick checks of your multiple, monthly gap, and emergency buffer a regular habit. Whether you're ahead of the game or playing catch-up, knowing where you stand is the first step to getting the retirement you want.