For many people approaching retirement, the transition feels heavier than expected. You spend decades earning, saving, and planning. Then one decision changes your life.
Once you give notice, the safety net you spent decades building has to hold on its own. That reality alone is enough to keep even well-prepared people working longer than they need to.
We meet many professionals who are “ready” on paper yet hesitate once it’s finally time to make the call. They become paralyzed by finite markers the world tells them signal retirement readiness.
Being ready to retire isn’t about hitting a certain age or account balance. It’s about understanding your options, your risks, and your tradeoffs — and knowing you can adapt as life unfolds.
Why Retirement Readiness Is Often Misunderstood
Most people anchor retirement readiness to a few familiar rules of thumb:
- “I’ll retire at 65.”
- “Once I hit $X in savings, I’ll be set.”
- “The retirement calculator says I’m fine.”
Those reference points are understandable, but incomplete. No retirement formula can perfectly account for unpredictable markets, inflation that ebbs and flows, healthcare costs that rise unevenly, and the fact that retirement timelines vary widely.
One person may retire for 20 years; another for 35. One may spend aggressively early; another conservatively throughout.
Widely accepted markers of retirement readiness (like the 4% rule) and basic calculators rely on averages and assumptions around investment returns, spending, and life paths. Real life is messier than that.
That’s why readiness is less about hitting a benchmark and more about flexibility. The mere fact that you’re asking, “Am I really ready?” is a sign you’re thinking about retirement the right way.
Instead of a single “yes or no” answer, readiness reveals itself through a series of signals.
Signal #1: Your Retirement Income Is Clear and Durable
There’s an important distinction between retirement savings and retirement income.
Savings are what you’ve accumulated. Income is how those assets support your lifestyle once the traditional paycheck stops.
A retirement income plan includes:
- Social Security benefits, which fluctuate depending on the year you claim.
- Withdrawals from IRAs and other retirement accounts. For example, in most cases, penalties apply before age 59½, and required minimum distributions eventually make withdrawals mandatory.
- Brokerage and savings accounts. These flexible accounts can help bridge income gaps, smooth taxes, and provide liquidity in volatile markets.
- Pensions or annuities: Guaranteed income sources can reduce reliance on portfolio withdrawals, allowing your retirement accounts to keep growing.
These sources must perform together in strong markets and weak ones. Early retirement years are especially sensitive. A downturn early in retirement can have a compounding impact if withdrawals aren’t structured thoughtfully from the start.
Working with a financial advisor helps stress-test income strategies against real-world scenarios, improving confidence that your income will last and clarifying your level of retirement readiness.
Signal #2: You Understand When (and How) to Claim Social Security
Once it’s time to claim Social Security, it’s tempting to pick an age, file the paperwork, and move on.
Don’t.
Social Security is one of the most powerful levers in retirement planning, and maximizing its value requires coordinating when you claim with how you draw income and what tax bracket you’re in.
For example:
- Claiming earlier may reduce pressure on portfolio withdrawals, especially in the first years of retirement.
- Delaying benefits can increase guaranteed lifetime income.
- Claiming timing can shift tax brackets and affect Medicare premiums.
At Full Retirement Age (FRA), you’re eligible for 100% of your calculated benefit. Claiming earlier can permanently reduce monthly benefits by as much as 30%, while delaying benefits up to age 70 can increase them to as much as 8% per year. For married couples, the decision is even more layered due to spousal and survival benefits.
Taxes add another dimension. Minnesota is one of only nine states that taxes some portion of Social Security income. Joint filers with provisional income above $108,320 may see up to 85% of their benefits taxed at the state level. This makes timing and coordination imperative for Minnesota retirees.
Signal #3: Healthcare Is Planned
Healthcare is one of the most underestimated retirement expenses. While Medicare provides coverage starting at age 65, if you decide to retire earlier, you will need a plan for covering several years of out-of-pocket health insurance costs until you become eligible. Even after Medicare starts, costs continue through premiums, deductibles, and long-term care needs.
Healthcare planning includes:
- Choosing between Original Medicare with a Medigap policy or Medicare Advantage.
- Accounting for IRMAA surcharges if income exceeds certain thresholds.
- Preparing for long-term care or home care needs.
While care costs in Minnesota tend to be more affordable than in other states, an individual retiring at 65 needs about $172,500 on average just to cover medical expenses in retirement.
Having a structured budget that accounts for 30 years or more of healthcare expenses is important for determining retirement readiness. This includes the unexpected.
Work with your advisor to test scenarios in which you must pay for long-term care or home care for yourself or your spouse.
Signal #4: Your Spending Is Intentional and Adaptable
For some, the first year includes a spike that corresponds with your newfound freedom: more travel, more discretionary spending, more…everything. For others, the opposite happens. The fear of “running out” leads to tighter spending — even when the numbers suggest they don’t need to be that conservative.
Both reactions are common. Neither is inherently wrong. What matters is that your spending is intentional, and your plan allows it to adapt over time.
This is why having a retirement budget in place is, quite literally, life-changing. Over time, your spending patterns will evolve: often higher early on, sometimes lower in the middle years, and potentially rising again later due to healthcare or care-related needs.
A well-designed retirement budget:
- Accounts for short-term and long-term spending
- Builds in flexibility rather than rigid assumptions
- Adjusts for inflation over time
It might also help to set some income “guardrails” to keep you on track. Retirement income guardrails — sometimes called dynamic withdrawal strategies — allow spending to rise or fall modestly based on market performance and portfolio health.
If markets perform well, or inflation rates spike, you may have room to spend a bit more. If they struggle, spending adjusts in a controlled way.
Signal #5: Your Investment Strategy Changes With Your Life
The investment strategy that helped you build wealth isn’t the same one that carries you through retirement.
Before retirement, the objective is fairly straightforward: grow your portfolio. As long as you contribute regularly and ride out market swings, you can let time do the heavy lifting. In retirement, the goalposts move. Now, your investments must generate income and continue to grow.
It’s entirely possible to do both. Some assets may still be invested for growth, while others are positioned to fund near-term income needs. It’s a delicate balance.
Many retirees start with a diversified allocation, such as a 60/40 stocks-bonds framework, as an all-weather baseline for their portfolio. Moreover, it’s also beneficial to diversify the types of accounts holding said assets, for flexibility and tax management. That includes:
- Taxable accounts (like brokerage accounts)
- Tax-deferred accounts (such as traditional IRAs and 401(k)s)
- Tax-free accounts (like Roth IRAs)
A mix of these accounts supports more efficient withdrawal sequencing, helping manage taxes, monthly income, and flexibility over time. This is often a strong indicator of readiness.
Signal #6: Your Plan Accounts for Taxes
Every withdrawal doesn’t automatically push you into a higher tax bracket. But how and where you withdraw from can meaningfully affect your lifetime tax burden.
Tax-deferred accounts like traditional IRAs and 401(k)s eventually trigger required minimum distributions (RMDs). Under SECURE 2.0, RMDs now begin at age 73 (rising to 75 in 2033). Once they start, the withdrawal amount — and the associated tax — is mandatory.
Coordinating withdrawals across accounts before RMD age is important. Strategic distributions earlier in retirement (sometimes from tax-deferred accounts) can reduce future RMDs and help smooth taxable income over time, rather than allowing large balances to compound future tax liabilities.
There are also proactive tax planning strategies that can help you keep more money in your pocket:
- Roth conversions: Moving funds from a traditional IRA or 401(k) into a Roth account before RMD age can reduce future RMDs and create tax-free income later.
- Capital gains harvesting: Realizing gains from taxable accounts in lower-income years can take advantage of favorable tax rates.
- Social Security coordination: Timing benefits alongside withdrawals can lower your overall lifetime tax bill.
These strategies can reduce lifetime tax exposure, which is important for Minnesotans, where the graduated income tax reaches as high as 9.85%, among the highest in the country.
That’s why tax planning is an ongoing effort worth coordinating alongside a reputable investment advisory firm.
Signal #7: You’ve Thought Beyond the Numbers
Next, consider Life After Work. Retirement is both a financial and lifestyle shift.
- Where do you want to live and could that change down the road?
- Will you stop working entirely, or ease into retirement through part-time work, consulting, or board service?
- Are there goals beyond your own lifestyle you want to fund: helping children or grandchildren with education, supporting charitable causes, or leaving a meaningful legacy?
Some retirees find that part-time or flexible work provides both supplemental income and structure. Others step fully away from work and redirect their energy toward travel, volunteering, or family. Each comes with different implications for income needs, taxes, and risk tolerance.
Where you live (and what you prioritize) affects taxes, the cost of living, and access to healthcare. Envision your future now, so you can ensure your financial plan supports the life you actually want to live.
What to Do If You’re “Mostly Ready”
The fact is, most people are closer than they think; they just need a little reassurance that their plan can withstand real-world conditions.
If you think you might be ready to retire, work with a wealth management and investment professional who can help you run “what if” scenarios (market downturns, higher spending, delayed Social Security) that help clarify your plans. They’ll help you understand how much flexibility you really have, and how different choices affect your financial future.
A Retirement Plan That Can Bend Without Breaking
No retirement plan predicts the future. But a personalized plan gives you options and confidence that you can adapt to life’s eventual curveballs.
If you’re asking the question, you’re already taking a step in the right direction.
Schedule a free consultation with Pine Grove Financial Group to stress-test your plan, clarify your options, and put you on the path toward a secure retirement.
