9 Ways To Know You’re Financially Ready To Retire in 2025
Written by
Nicole Spector
Edited by
Molly Sullivan
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Every year, millions of people retire — and the number is growing as boomers age. If you’re thinking about hanging up your working hat in 2025, now is the time to start making sure you have all your ducks in a row for a secure and comfortable retirement.
GOBankingRates chatted with financial experts to find out how you can know for sure that you’re financially ready to retire in the next year.
You Have Enough Saved
Perhaps the most important way to know that you’re ready to retire is knowing that you have sufficient funds to cover living expenses throughout your golden years.
“It is crucial to ensure that your investments are structured to generate income, so you don’t have to cannibalize your portfolio, thus reducing the risk of running out of money,” Anthony Saccaro, president at Providence Financial & Insurance Services.
You Have a Budget Plan for Retirement
Just as must have in your working years, you need a strong budget that details your expected income and expenses. This, Saccaro said, can help you maintain your desired lifestyle without financial strain.
You Have Steady Income Streams To Rely On
Another key way to know you’re ready to retire is having secure and reliable income streams that will nourish you in retirement. This could be Social Security, along with a pension or annuities.
“It’s critical to consider the consequences of your income stream choices — i.e. when to file for [Social Security] and spousal continuation options for pensions — upon a surviving spouse in the event of a premature death,” Saccaro said.
You Have an Emergency Fund
Your retirement savings and investments should be separate from your emergency fund, which you must always have intact. Saccaro recommended holding six to 12 months of living expenses in a liquid, accessible account.
You Have Clear Retirement Goals
Another key indication that you can safely and securely retire is, according to Saccaro, “having a clear vision of what you want to do in retirement, including travel, hobbies, volunteer work or part-time employment, which helps in planning both financially and emotionally.”
You’re Prepared for a Market Decline
The truth of the matter is: We never know exactly when a market decline could hit. Rather than hiding under the sheets hoping it won’t happen, you must always be prepared for a recession. This is especially important if you’re eyeing retirement soon.
“What would happen if there was a sudden market decline right when you retire in 2025?” said Justin Haywood, CFP, president and co-founder of Haywood Wealth Management. “Ensure your portfolio can withstand such shocks without jeopardizing your financial stability.”
You Tested Your Retirement Plan for Lower Returns
Haywood explained that if your retirement plan assumes a 6% return, you must stress test it for lower returns, such as 4%.
“This helps determine if your portfolio can still last under less favorable conditions,” he said.
You’ve Factored in Future Inflation
Whether it reaches record highs or not, inflation will always happen — it’s a symptom of a healthy economy, to an extent. You must be prepared to tackle it.
“You’ve baked inflation into your spending estimates, so you have an estimate of what it will cost to retire today and what that will look like ten years from now,” said Dana Anspach, CFP, RMA and founder and CEO of Sensible Money, in regards to one of the key ways to know you’re ready to retire in 2025.
You Have Saved for Long-Term Care Expenses
If you’re turning 65 in 2024, you will be eligible for Medicare. But Medicare isn’t a failsafe for all healthcare expenses. For example, you’ll need to set aside money for medical expenses that may not be covered by Medicare, such as long-term care needs.
“These can often be significant costs at the end of life, and planning for them can prevent financial strain later,” Haywood said.
More From GOBankingRates
