Retirement shouldn’t be about spreadsheets. It should be about pickleball at 10am on a Tuesday.

But enjoying that freedom starts with knowing the answer to one question:

Am I ready to retire?

It is one of the most common questions we hear from clients and is also one of the hardest to answer with a simple yes or no.

Closely followed by two others:

• Will I run out of money?

• What kind of returns should I realistically expect?

These questions come up whether you are five years from retirement or already there. They also tend to show up together, because retirement planning is not just about hitting a number. It is about understanding risk, income, and how your money needs to function once your paycheck stops.

In this client Q&A, we break down how to think about retirement readiness, how much risk makes sense, and how to set realistic expectations for investment returns without guessing or chasing what someone else is doing.

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Q: Am I On Track for Retirement?

This is a big question, and it is a loaded one. Am I Ready to Retire?

There are a lot of moving parts, which is why blanket rules and online calculators often miss the mark.

That said, there is a simple way to get a back-of-the-napkin answer that gets you most of the way there.

Start With Your Lifestyle, Not a Formula

You will often hear that people spend less in retirement. In reality, that is not always true.

What we typically see is this:

• Early retirement spending is often the same or higher

• Travel increases

• Deferred experiences finally happen

• Time, not money, becomes the constraint

Because of that, a good starting point is your current spending, not what someone says you should spend in retirement.

Look at what you actually spend on:

• Housing

• Food

• Travel

• Utilities

• Transportation

• Entertainment

• Insurance

• Everything that supports the life you want

It is usually best to look at this over a full year, since some months are naturally higher than others. December might look very different than April. Summer might be more expensive than winter. What matters is the average.

Savings contributions are different. If you are actively saving into a 401(k), Roth IRA, or HSA, those contributions can usually be removed from your retirement spending estimate.

What remains is a realistic picture of what it costs to live your life.

Identify Income That Comes In Automatically

Once you know what you spend, the next step is to identify income that comes in without you working.

Start with the basics:

• Social Security

• Pension income, if applicable

• Rental income or other passive income streams

Add up everything that shows up consistently without you having to lift a finger.

At this point, you should have two numbers:

1. What you spend

2. What comes in automatically

If income exceeds spending, you are already in a strong position. If there is a gap, that gap needs to be filled by your investment portfolio.

Using the 4 Percent Rule as a Reality Check

This is where retirement accounts come into play.

IRAs, 401(k)s, brokerage accounts, and other invested assets are typically used to fill the gap between spending and guaranteed income.

A commonly used guideline here is the 4 percent rule.

The idea is simple:

• Take the total value of your investment assets

• Multiply by 4 percent

• That is a reasonable annual withdrawal amount that historically has kept pace with inflation

This is not perfect math. It is not a guarantee. But it does get you close enough to answer the question: Am I ready to retire?

For example:

• $1,000,000 x 4 percent = $40,000 per year

• Combine that with Social Security and other income

• Compare it to your annual spending

If the numbers line up, you are likely on track.

If they do not, something has to change:

• Save more

• Spend less

• Work longer

• Adjust expectations

There is no judgment in that. It is simply math.

Q: Will I Run Out of Money?

This is the biggest fear most people have going into retirement. And it is not one that disappears just because someone explains it to you.

In many cases, the fear only fades once you actually live through retirement and see that the plan works.

Why This Fear Exists

When you are working, income feels unlimited. You may change jobs, get raises, or work longer if needed.

When you retire, that changes.

Your income is no longer tied to your effort, and that psychological shift is significant. You are moving from accumulation to distribution, and that transition can be uncomfortable.

Expenses can still be unpredictable. Medical costs, inflation, and market volatility all add uncertainty.

That is why risk management matters so much in retirement.

The Risk Most Retirees Take Without Realizing It

One of the most common mistakes we see is retirees taking more risk than they actually need to.

Often this happens because:

• Friends are doing it

• Headlines are loud

• Recent returns look impressive

• The market has been strong

• FOMO

When you are working, market swings matter less. If the market drops 30 percent and you are still earning a paycheck, you are not forced to sell investments at a bad time.

In retirement, that changes.

If you need to pull income from your portfolio and the market is down, you may be forced to sell at exactly the wrong moment. That can permanently damage a retirement plan.

Sometimes, when the game is already won, you do not need to keep playing aggressively. You may not need to dominate. You may simply need to avoid losing.

That shift in mindset is critical.

Playing to Win vs Playing Not to Lose

This is where retirement planning becomes personal.

If your biggest fear is running out of money, then your portfolio should reflect that. That often means being more conservative than you were during your working years.

If your biggest goal is maximizing growth and you have more flexibility, you may be able to take more risk.

Neither approach is inherently right or wrong. What matters is that your investment strategy matches:

• Your goals

• Your income needs

• Your tolerance for volatility

• Your actual situation, not someone else’s

Old rules like “your age equals your bond allocation” are outdated. Retirement planning today needs to be far more individualized.

Q: What Returns Should I Expect?

This is another question that we get when someone asks “Am I Ready to Retire?” is “What Returns should I expect” This often gets oversimplified.

Returns depend entirely on what you are invested in.

Stocks

For a diversified stock portfolio, long-term expectations in the range of 8 to 12 percent are reasonable. That comes with volatility, sometimes significant volatility.

Fixed Income

Fixed income investments like bonds, CDs, and Treasuries are designed for stability and income, not growth.

In recent years, expected returns here have been much lower, often in the 3 to 5 percent range.

The trade-off is reduced volatility and more predictable cash flow.

Why Comparisons Matter

One of the biggest mistakes investors make is comparing apples to oranges.

Stocks should be compared to stocks. Bonds should be compared to bonds.

If an equity-heavy portfolio is averaging 5 percent over a long period, that may be a red flag. If a conservative, income-focused portfolio is doing the same, it may be completely appropriate.

Context matters.

Understanding Alternative Investments and Liquidity

Alternatives include investments that are not traditional stocks, bonds, ETFs, or cash. Examples include:

• Private equity

• Private credit

• Real estate

The biggest thing you give up with alternatives is liquidity.

If you own a publicly traded stock, you can sell it and have cash quickly.

With alternatives:

• Money may be locked up for years

• Access may be limited to quarterly windows

• Redemptions may be capped or delayed

Because of that, you should expect higher returns in exchange for giving up liquidity.

As a general guideline:

• Private equity often targets higher returns than public markets

• Private credit should pay more than traditional fixed income

• If an illiquid investment offers the same return as a liquid one, the liquid option usually makes more sense

Liquidity is flexibility, and flexibility matters in retirement.

Why Most Advisors Focus on Diversification, Not Beating the Market

Data consistently shows that most active managers do not outperform the market over long periods.

That does not mean advisors have no value. It means their value lies in:

• Portfolio construction

• Risk management

• Behavioral coaching

• Planning integration

The goal is not to win every year. The goal is to build a portfolio that supports your life and holds up across different market environments.

Am I Ready To Retire? The Bottom Line

Retirement readiness is not about a single number or a perfect return. When you ask yourself “Am I ready to retire?” remember:

It is about alignment.

• Does your income support your lifestyle?

• Does your risk match your goals?

• Are your expectations realistic?

• Is your portfolio built for the phase of life you are in?

If you can answer those questions honestly, you are already ahead of most people.

And if you cannot, that is where thoughtful planning comes in.

If you have questions about your own situation, we are always happy to talk through it with you one-on-one. Schedule a call today!