Can You Afford to Retire? 7 Numbers to Check

A retirement date can look close on a calendar and uncertain on a bank statement. A 401(k) balance cannot show what the mortgage, groceries, medical care, taxes, and ordinary life will require each month. The question “Can I afford to retire?” cannot be answered by savings alone.

Seven connected numbers provide a useful first answer. Together, they show the lifestyle your money must support, the income available at each stage, and what savings may need to provide. They can reveal whether the planned retirement date holds up.

1. Target Annual Retirement Income

Build this amount from the life you expect to live, including ordinary bills, travel, family support, and home repairs. Decide whether the target is before or after taxes and keep every figure on the same basis. An after-tax target must be compared with income after estimated taxes and withholding.

2. Essential Monthly Spending

Review 12 months of statements and calculate housing, utilities, food, transportation, insurance, and recurring household needs. Remove work expenses that will disappear, then add retirement expenses that will begin.

A full year catches annual renewals and irregular bills that one month may hide.

3. Monthly Debt Payments

Record the mortgage, vehicle loans, credit cards, student loans, and other required payments separately. Use the monthly payment expected on your retirement date and note when each debt is scheduled to end.

A car loan ending next year creates a different picture from a mortgage continuing for another decade.

4. Reliable Monthly Retirement Income

Add only income available when retirement begins, such as Social Security already being claimed, a pension starting at retirement, or income supported by an existing contract or benefit statement.

If Social Security or a pension starts later, calculate one gap for the bridge years and another after the benefit begins. A personal Social Security account shows estimated benefits at different claiming ages between 62 and 70. (Source: Social Security Administration)

5. Annual Healthcare Costs

Before Medicare eligibility, coverage needs a separate estimate. After enrollment, the budget may include Medicare premiums, supplemental or Medicare Advantage coverage, prescription drugs, dental and vision care, and out-of-pocket costs.

In 2026, the standard Medicare Part B premium is $202.90 per month and its annual deductible is $283. Higher-income beneficiaries may pay more. (Source: Centers for Medicare & Medicaid Services)

Medicare is generally available to people 65 or older who meet its requirements, with earlier eligibility possible for certain disabilities, End-Stage Renal Disease, or ALS. Someone first eligible at 65 and retiring at 63 may need roughly two years of pre-Medicare coverage. (Source: Medicare.gov)

Numbers 2, 3, and 5 help build or test Number 1. Costs already included in the income target should not be added again.

6. Total Retirement Savings

Combine balances intended to support retirement, including workplace plans, IRAs, and taxable investment accounts. Exclude money committed to another goal.

Count home equity only if the plan includes selling, downsizing, borrowing against it, or producing income from the property.

7. Annual Retirement Income Gap

The annual retirement income gap is the difference between the target and the reliable income available during that phase of retirement. The remaining amount is what savings and other flexible resources may need to provide.

SLD Solutions explains the concept further in its guide to the difference between retirement income and retirement savings.

Consider a hypothetical household retiring with a $66,000 annual target and $600,000 in retirement savings, using figures on the same after-tax basis. An $18,000 pension begins immediately, while $24,000 in annual Social Security begins four years later.

The gap is $48,000 during each of the first four years, then falls to $24,000 after Social Security starts. Across those bridge years, $192,000 would need to come from the household’s retirement savings before considering investment gains or losses, inflation, or changes in spending.

Using only the later $24,000 gap would hide a substantial part of the retirement-date calculation.

Test the Seven Numbers Against Your Retirement Date

Put the seven figures beside the planned retirement date, then change one assumption. Raise healthcare costs, add a major home repair, or move the Social Security start date.

A shortfall after one ordinary change may mean the retirement date depends on assumptions that are too tight. A plan that still works under several plausible changes provides stronger evidence that the date is realistic.

These seven numbers provide a first-pass affordability check. A full retirement projection still needs assumptions for longevity, inflation, taxes, investment performance, and changing expenses.

SLD Solutions offers retirement planning and financial coordination for people who want these figures reviewed together. See how your seven numbers work together and schedule a complimentary retirement planning appointment with SLD Solutions.

Disclaimer: This article is for educational purposes and does not provide individualized tax, investment, insurance, or legal advice.