Are You On Track To Retire?

How to tell if you’ve saved enough to retire when you want, and what to do if you haven’t.

- Eileen Ambrose And Kimberly Lankford

Many people get serious about calculating whether they are on target to retire when they hit their fifties. That’s often when reality starts to sink in and retirement no longer seems like just a vague goal. Figuring out whether you’ll have enough assets and income to cover a retirement that can easily stretch to 30 years can be daunting, but there’s no lack of advice out there. For a quick-and-dirty way to see if you’re on track, you could check one of the multitude of savings benchmarks financial firms offer . Or you could use one of the many online retirement calculators provided by Fidelity Investments, T. Rowe Price, Vanguard and others. (Kiplinger also offers a calculator at kiplinger .com/links/retirementcalculator.)

A BETTER WAY

For a more accurate estimate, you’ll have to crunch your own numbers. A few things to keep in mind: When you estimate yearly expenses in retirement, remember that you’ll no longer be contributing to retirement savings, you’ll likely pay less in taxes, and if you plan to pay off your mortgage, those payments will disappear. (You may want to boost your budget for travel and hobbies.) Don’t forget that your costs will go up with inflation (figure 3% a year).

The next step is to add up your annual sources of guaranteed income, such as Social Security and possibly a pension. To find your estimated Social Security benefits, open a “my Social Security” account online at www.ssa.gov/myaccount. Finally, subtract your income from expenses. What’s left is how much money you will need to draw down from your savings to maintain your lifestyle.