As retirement approaches, many people feel a mixture of excitement and anxiety.
According to a recent survey by the Employee Benefit Research Institute (EBRI), 67% of workers say they’re confident they’ll have enough money to maintain a comfortable lifestyle in retirement. That also means roughly one-third are worried they won’t.
That concern may explain why 55-year-old Linda from Arizona called Suze Orman for advice. She and her husband Tom, 57, hope to retire at 62. They’re open to working part-time but plan to scale back significantly.
Linda wanted to know if they’re on track to retire comfortably — especially given their travel-heavy lifestyle. When Orman asked what grade she’d give herself on retirement readiness, Linda said C+. Orman strongly disagreed.
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How to get an A+ in retirement preparedness
While Linda may not feel confident about her retirement readiness, Orman strongly disagrees — and the numbers back her up. Linda and Tom have the following assets:
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$567,489 in retirement savings
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$59,954 in an emergency fund
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$41,303 in investments
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$186,000 in home equity (their home is paid off)
That totals $854,746. However, they also carry $21,568 in debt, which brings their net worth to $833,178.
But what really tells the story, Orman says, is their income versus expenses.
Linda and Tom bring in $10,815 per month after taxes. Their monthly expenses average $6,098. They’re saving $1,709 monthly, which still leaves $3,008 in discretionary income. And with seven more working years for Linda and five for Tom, they still have time to save even more.
Orman estimates their expenses in retirement will remain around $6,000 per month after taxes. The good news is that the numbers still work.
Tom will receive a pension of $2,031 per month after taxes. Linda earns $5,000 monthly and may continue working two years beyond Tom’s retirement, giving them more than $7,000 per month during that time — more than enough to cover expenses.
Once Linda retires, she’ll receive an after-tax pension of $2,600. Their retirement investments are projected to give them $3,488 per month after taxes, bringing their combined monthly income to $8,119 per month — roughly $2,000 more than they need.
And that doesn’t even include Social Security. If they wait until age 67 to claim benefits, they’ll receive their full amounts. Waiting even longer could boost their monthly payments further.
All told, they’re in good financial shape. As Orman told them, "You are doing great."
To earn an A+ in retirement preparedness, Orman advised the couple to purchase long-term care insurance — which is something they can afford. Once they check that box, Orman believes they’re fully set.
Read more: US car insurance costs have surged 50% from 2020 to 2024 — this simple 2-minute check could put hundreds back in your pocket
How to make sure you’re on track for retirement
If you’re five to seven years from retirement, now is the time to assess your finances and make sure you’re on track to cover your costs once you stop working. Here’s how to get started:
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Estimate your monthly income needs after taxes
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Calculate your expected monthly pension, if applicable
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Check your projected Social Security benefits
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Use a withdrawal rate (like the 4% rule) to estimate the monthly income your savings can generate
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Ensure you have long-term care insurance or a solid plan to cover those costs
Once you’ve gathered those numbers, see if they align.
For example, say you expect to need $6,000 per month after taxes (including long-term care costs). If you have no pension and expect $2,400 per month from Social Security, your savings would need to generate the remaining $3,600, or $43,200 annually.
Using the 4% rule, that means you’d need about $1,080,000 in retirement savings to meet that income goal.
If you currently have $1 million saved and plan to work another five to seven years, you’re likely on track — especially if you continue saving steadily. But if you’ve saved $800,000 so far, you may need to:
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Increase your savings rate
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Work a few extra years
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Adjust your retirement lifestyle to lower your income needs
Either way, the more detailed the planning, the more confident you can feel heading into retirement.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.