9 Signs You’re Doing Better Than Most Retirees, According to Kevin Lum
Written by
Jordan Rosenfeld
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Molly Sullivan
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Retirement planning can feel vague and nerve wracking until you get close enough to retirement to really see what you’ve got. It’s common for retirees to assume they’re behind. But what if that feeling isn’t rooted in reality? According to financial planner Kevin Lum, founder of Foundry Financial and host of the YouTube channel and podcast “Retirement Made Simple,” some of the people who worry the most about their retirement readiness are actually in better shape than they realize.
Here are nine signs that you’re more prepared for retirement than you think.
1. You Know Exactly What You Spend Each Month
Knowing your monthly spending as an actual number and not an estimate is one of the clearest indicators of retirement readiness, Lum said. It allows for accurate planning and reduces uncertainty about whether your income can support your lifestyle.
“When you don’t know what you’re spending, it puts your retirement plan in a very precarious position,” Lum explained.
2. Your Guaranteed Income Covers Most Core Expenses
If your essential expenses — such as housing, food and healthcare — are largely covered by predictable income like Social Security or a pension, you have a strong advantage.
Lum explained that you can then “afford to be patient” and sit through market drawdowns without anxiety.
3. You Entered Retirement With Little or No Debt
Carrying minimal debt, particularly that of the low interest variety, can dramatically improve retirement flexibility and reduce financial stress.
“If you are entering retirement with no credit card debt, no car payments or no personal loans outside of maybe a low-rate mortgage, you are increasingly the exception, not the rule.”
4. You Have Multiple Income Streams
Relying on more than one income source, such as Social Security plus investments, part-time work or a pension, creates a more resilient retirement plan and “gives you a leg up on most other retirees,” Lum said.
If you also have multiple income streams or “multiple pots of money to pull from,” your retirement is likely to be more secure, he said.
5. You Have Saved for Retirement — Even If It Doesn’t Feel Like Enough
Even modest retirement savings can put you ahead of a significant portion of retirees. Lum said nearly 40% of Americans ages 65 and older have no retirement savings.
If you have savings, it shows that you’re disciplined enough to save and live below your means, which will come in handy in retirement.
6. You Have an Emergency Cash Cushion
If you’ve got a cash buffer in case of emergencies, you’re likely to stay out of debt, and reduce your financial anxiety in retirement, Lum said.
“When that number gets too low and there’s no buffer or there’s no margin, it can trick their mind into a scarcity mindset and it makes them scared to spend the money they have,” Lum explained.
7. You’ve Delayed Social Security or Have a Strategy for It
Delaying Social Security benefits can significantly increase lifetime income by 8% each year and strengthen your financial foundation, especially when paired with other income sources.
It sounds simple, but the more guaranteed income you have coming into retirement, “the more secure and the better off you are,” he said.
8. You Have an Estate Plan in Place
If you come into retirement with a will, trust or clear beneficiary designations this is a good sign for both preparation and intentional financial decision-making. “That mindset is worth more than the documents themselves.”
An astonishingly low number of Americans have a formal will — only 31%, and 55% have no estate plan at all, he shared.
9. Your Lifestyle Didn’t Inflate as Your Income Grew
Retirees who avoided lifestyle creep while earning more over time tend to be in the strongest financial positions.
Though Lum is clear that “there’s nothing wrong with spending” and many retirees “should be spending more.” However, the people in the consistently strongest financial positions “are the ones whose spending grew slower than their wealth.”
Remember To Enjoy Retirement
Even if you recognize several of these signs, Lum said the biggest risk may not be running out of money, but “that you don’t actually spend what you could.” Don’t forget to enjoy retirement if you’re already ahead of the game.
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