What Does “On Track for Retirement” Really Mean?
It’s More Than a Magic Number
For most people planning their financial future, one of the most important questions is, am I on track for retirement? The answer depends on many factors, and it goes well beyond a specific number. While some headlines cite a retirement savings goal of $1.26 million, this figure offers only a general idea of what may be needed. For high-net-worth individuals and business owners, the number could be significantly higher. It depends on your lifestyle, your income needs, and how long you expect to live in retirement.
Being on track for retirement means having the financial stability to maintain your lifestyle after you stop working. It involves aligning your retirement budget with your retirement income and managing your investments, taxes, and expenses with discipline and foresight. Every person’s journey is unique, and the right strategy must be tailored to your specific financial goals, often with the help of professional wealth management and personalized investment advice.
Key Questions to Start With
To assess your retirement readiness, begin with these core questions:
- What is your target retirement age?
- How much annual income will you need?
- What will your income sources be in retirement?
- What is your estimated life expectancy?
- How will you pay for health care and other major expenses?
The answers to these questions will help you determine whether your current retirement savings, projected savings rate, and retirement accounts are sufficient. They will also help define how much you need to save for retirement and whether your investments, including fixed income, mutual funds, and other assets, are aligned with your retirement goals. Consulting with a SEC registered investment adviser can provide valuable tax advice and guidance to make informed investment decisions, ensuring your personal finance strategy remains on track.
Retirement Readiness Benchmarks by Age
Salary Multiples: Common Savings Targets by Age
A good rule of thumb for tracking your savings progress is to save a multiple of your pre retirement income by certain ages. According to industry standards:
- By age 30: 1x your annual income
- By age 40: 3x
- By age 50: 6x
- By age 60: 8x
- By age 67: 10x
These benchmarks assume steady annual contributions, including any employer match, and disciplined investing throughout your working life. They also assume you’ll retire at full retirement age and will have moderate expenses in retirement. These general benchmarks are helpful, but they don’t account for every financial situation or the past performance of specific investments, which can impact your portfolio’s growth.
Adjusting Benchmarks for Higher Incomes and Complex Finances
High-net-worth individuals often need to customize these milestones. Business owners, executives with equity compensation, and professionals with varied income sources may need to save significantly more. Additionally, if you plan to retire earlier than the typical retirement age or maintain a higher standard of living, your retirement savings goal may need to be 12x to 15x your pre retirement income.
You may also need to evaluate assets held outside of traditional retirement accounts. Real estate, equity in a business, and nonqualified investments must all be factored into your total retirement plan. A certified financial planner or a SEC registered investment adviser can help you calculate how your current savings compare to your long-term retirement goals and provide tailored investment advice to optimize your wealth management strategy.
How Much Will You Really Need? Reverse-Engineering Your Retirement Goal
The 4% Rule and Its Limitations
Many retirement planners reference the 4% rule to estimate how much you can safely withdraw from your portfolio each year. If you plan to withdraw 4% annually, a $2 million retirement portfolio would provide roughly $80,000 in retirement income per year. But the 4% rule is based on historic returns, and future results could vary. It does not factor in inflation rate changes, health care costs, taxes, or the impact of different investment strategies, including fixed income allocations.
Using a Cash Flow-Based Approach
Instead of relying solely on a single withdrawal percentage, use a retirement calculator that builds a retirement budget based on actual income and expenses. Your retirement plan should include:
- Housing costs
- Health care and long-term care
- Travel and leisure
- Charitable giving
- Taxes and other fees
- Inflation rate assumptions
- Income from Social Security and pensions
A retirement calculator can help you explore different scenarios and estimate whether your current retirement savings and future monthly contribution levels will meet your expected expenses. Working with financial advisors who provide both investment advice and tax advice can help you make prudent investment decisions and optimize your portfolio of mutual funds, fixed income, and other assets.
Retirement Income Sources to Consider
Understanding your retirement income sources is essential to your plan. These may include:
- Withdrawals from retirement accounts like 401(k)s, IRAs, and Roth IRAs
- Social Security benefits
- Pension income or annuities
- Passive income from real estate or businesses
- Income from taxable investment accounts
- Trust distributions or family wealth transfers
Each source of income may be taxed differently and arrive at a different point in your retirement. Working with a certified financial planner and a tax advisor can help you build a tax-efficient income strategy that aligns with your retirement budget and investment objectives.
What the Latest Data Says: Are Americans Really on Track?
2025 Statistics and Retirement Savings Gaps
Recent data from 2025 reveals that the average retirement savings for those approaching retirement is far below what’s typically needed. Americans aged 55 to 64 have median savings of just $185,000. For those between 65 and 74, the median is only slightly higher, at around $200,000.
Given that many financial advisors recommend having at least 10x your annual income saved by retirement age, these figures highlight a significant shortfall. While some households may have additional assets or pensions, most people are not where they need to be.
Why High-Net-Worth Clients Need to Think Differently
If your retirement plan includes maintaining a high standard of living, traveling, supporting charitable causes, or leaving a financial legacy, you’ll likely need far more than average benchmarks suggest. Additionally, your portfolio may include illiquid assets or complex investment strategies that need to be carefully evaluated.
Your planning must incorporate all your income sources and reflect accurate key assumptions about inflation rate, life expectancy, and taxes. The question is not just how much you have saved, but whether you’re on the right track for retirement based on your desired lifestyle and the assets needed to support it.
5 Signs You Might Be Off Track – And How to Fix It
1 | You’re Not Saving Consistently (10–15%+ Rule)
If you’re saving less than 10% to 15% of your annual income, you may need to increase your monthly contribution. Many employers offer an employer match, and you should contribute at least enough to capture the full match. Increasing your annual contributions, even by 1%, can have a significant impact over time thanks to compound interest.
2 | You Haven’t Updated Your Plan in Years
Retirement planning is not set-it-and-forget-it. A retirement calculator based on outdated information can give a false sense of security. You should review your plan annually to account for changes in income, expenses, investment performance, or health care costs.
3 | You’re Relying Too Much on One Income Stream
Diversification matters. If most of your expected income in retirement comes from Social Security or a single pension, you may be at risk. Your retirement income should be spread across multiple sources, including investments, retirement accounts, and other assets.
4 | You Have No Strategy for Healthcare or Long-Term Care
Health care is one of the largest expenses in retirement. If your retirement budget doesn’t account for rising medical costs or potential long-term care, your plan may be underfunded. Working with a financial advisor to prepare for these costs is critical.
5 | Your Portfolio Isn’t Aligned With Your Retirement Timeline
As you near your retirement age, your investment strategy should evolve. You may want to reduce market risk while still maintaining enough growth to support your life expectancy. Your portfolio should reflect your retirement goals, risk tolerance, and cash flow needs. A well-balanced mix of mutual funds, fixed income, and equity investments, guided by professional wealth management, can help you achieve this balance.
How Towerpoint Wealth Helps Clients Get, and Stay, On Track
Retirement Readiness Assessments
At Towerpoint Wealth, we provide comprehensive retirement readiness assessments that go beyond a basic retirement calculator. We evaluate your current retirement savings, income sources, investment objectives, tax exposure, and estate plan to determine if you’re truly on track for retirement.
Personalized Cash Flow Projections
We create customized financial models that reflect your actual retirement budget. These models are designed to test different scenarios and evaluate whether your retirement plan can support your lifestyle across a 30+ year retirement horizon.
Strategic Adjustments as Life Changes
Life doesn’t always follow a linear path. Whether you sell a business, experience a health event, receive an inheritance, or want to relocate, we adjust your retirement plan accordingly. Our team works with your tax advisor and estate attorney to ensure alignment across your financial ecosystem.
FAQs About Being On Track for Retirement
What percentage of income should I save for retirement?
Most people should aim to save 15% to 20% of their pre retirement income. This includes your monthly contribution to retirement accounts and any employer match. The earlier you start saving, the more you’ll benefit from compound interest.
Is $2 million enough to retire?
It depends on your retirement budget and expected income sources. For some, $2 million is more than enough. For others, it may not cover basic expenses, especially if you retire early or have high health care costs.
How do I know if my current savings will support my retirement lifestyle?
You need a detailed retirement plan that includes an analysis of your current savings, income sources, expected expenses, inflation rate, and life expectancy. A certified financial planner can run different scenarios to help you track your progress and provide investment advice tailored to your personal finance needs.
What if I’m behind, is it too late to catch up?
It’s never too late to start saving for retirement. You can make catch-up contributions, defer your retirement age, increase your income, or adjust your lifestyle. The key is to take action now and build a plan around your current financial situation.
What factors should I include in my retirement plan?
Include your expected expenses, income sources, taxes, inflation rate, investment strategies, health care needs, and any other fees. The more complete your plan, the more likely you are to stay on track for retirement.
Final Thoughts — Clarity, Confidence, and a Customized Plan
Planning for retirement is about more than just reaching a retirement savings goal. It’s about building a personalized retirement plan that reflects your lifestyle, values, and income needs. With a clear retirement budget, diversified income sources, and proactive tax and investment strategies, including mutual funds and fixed income, you can retire with confidence.
If you’re asking yourself, “Am I on track for retirement?”, now is the time to get answers. Schedule a complimentary consultation with Towerpoint Wealth, a SEC registered investment adviser, to build a customized strategy and see if your current retirement savings and plan will support your long-term goals.
