Has Your Retirement Plan Fallen Off Track? Here's How To Know and Steps to Get It Back in Line

Regardless of whether you can imagine ever retiring, it’s good to have a plan in place. But how can you know if your plan will get you where you want to be when the day comes? And even if you do have what looks like a sensible plan today, how can you make sure it doesn’t go off track in the years ahead?

Many people worry—and rightly so—that they won’t have enough money to retire if and when they want to. Here’s advice on determining whether you’re on track to a comfortable retirement and how to course-correct if you need to.

How To Know if You’re Off Track

Financial planners and other experts use a variety of benchmarks to determine whether someone is saving enough for retirement. While no two people’s needs are identical—and absolutely nobody can predict what surprises the economy might have in store in the decades ahead—these guidelines will at least give you some idea of where you stand.

One common approach is to set retirement savings goals based on a multiple of your salary at a particular age. For example, the mutual fund giant Fidelity Investments recommends saving an amount equal to your salary by age 30, three times your salary by age 40, six times your salary by age 50, and eight times your salary by age 60. At age 67, it suggests using a multiple of 10.

The 25x Rule

Another common guideline, often called the 25x rule, is that your savings at retirement should equal 25 times the amount of money you’ll need to withdraw from them each year. This advice is based on yet another guideline, the 4% rule, which suggests you should be able to withdraw that percentage of your savings each year with minimal risk of outliving your money.

So, for example, if you expect to need $50,000 a year for retirement someday and will have $20,000 in annual income from Social Security, traditional pensions, or other sources, your savings will need to provide the remaining $30,000 a year. Multiply that $30,000 by 25 and you reach a goal of $750,000.

Run the Numbers

You can also get a more custom-tailored estimate of how much you need to save by doing basic calculations. Your results will likely be more accurate the closer you are to retiring, but even if retirement is many years off, this exercise could still be worth an hour or two of your time.

Basically, there are three factors you’ll need to consider: your likely expenses in retirement, your expected income from sources other than savings, and the amount of savings you’ll need to make up any gap between the first two.

Your Retirement Expenses

Traditionally, retirees have assumed that their expenses would go down in retirement, now that they no longer have to commute, for example. Experience has shown, however, that many people’s expenses actually go up, especially in the early years when they may want to travel more widely or simply have more time to shop. Expenses may then decline for a period but rise again late in life with increased health care costs.

Your Retirement Income

You can obtain an estimate of your likely Social Security benefits on the Social Security Administration website, using either its Quick Calculator or the more personalized (and less quick) My Social Security Retirement Estimate calculator.

If you are fortunate enough to have income from a traditional defined-benefit pension coming to you someday, you should receive an individual benefit statement periodically with the details. You can also ask your plan administrator for this information.

Also consider any other income you might realistically expect. For example, do you own any income-producing rental properties, do you have an annuity from an insurance company, or do you expect to work part-time after you retire?

Your Retirement Savings

After you’ve estimated your annual expenses and calculated your expected income, subtract the former from the latter. For many people, there will be a shortfall. Social Security, for example, only replaces about 40% of the average person’s pre-retirement income.

Unless you’re prepared to slash your retirement expenses substantially, your retirement savings will need to cover that shortfall.

You can do these back-of-the-envelope calculations on paper (even on the actual back of an envelope) or consult any of the various online calculators available for this purpose.

Ways To Get Back on Track

If you discover you need to put more money aside for retirement, the first move to consider would be upping your contributions to any 401(k) or other defined-contribution plan offered by your employer. These plans are convenient (the money comes out of your pay automatically), and many employers will match at least a portion of your contributions.

These plans also have annual limits, which can change each year; for 2025, the limit is $23,500. If you’re 50 or older, you’re also eligible for an additional catch-up contribution of $7,500, for a total maximum of $31,000. In addition, a change enacted as part of the Secure 2.0 Act in 2022 allows employees who are 60, 61, 62, or 63 to make an even higher catch-up contribution of up to $11,250 (for 2025).

If you can’t afford to contribute the absolute maximum, any increase you can make to your contributions will get you closer to your goal. If you are able to max out your plan and have even more money to sock away, consider a traditional IRA or a Roth IRA if you qualify.

Still another way to boost your savings is to earmark for retirement at least a portion of any irregular or unexpected income—such as a work bonus or an inheritance—and invest it in a dedicated account that you promise not to raid in the meantime.

Finally, as you add to your savings, take a little time to make sure they’re invested appropriately. As a general rule, the further you are from retirement, the more aggressively you can afford to invest in the expectation of higher returns over time. But as you move closer, you may want to ratchet things down by rebalancing your portfolio and putting a greater emphasis on more conservative investments.

Lifestyle and Timing Adjustments

You can also increase your retirement savings by reducing your everyday spending and investing the money instead. Paring back a bit today is likely to be easier than cutting your spending after you retire.

One way to get a handle on your spending is to record everything you buy or spend money on over a certain period, such as a month or two, using your credit card, bank statements, and cash receipts.

While you can save some money by reining in your small purchases—like the often-demonized $5 morning latte—your biggest spending categories will most likely provide the greatest opportunities. Those will typically include housing, transportation, insurance, and entertainment, such as dining out.

In the case of housing, for example, you could consider downsizing prior to retirement to save on rent or mortgage costs. Or, if you want to stay where you are, you might be able to at least trim your utility bills by using less energy. You might also consider shopping around to see if your current homeowners or renters’ insurance is the best deal you can get. Similarly, if you have a car, it could be worth comparison shopping the next time your automobile policy comes up for renewal.

In addition, each year you can put off claiming Social Security, up to age 70, will mean a higher monthly benefit when you do start collecting. For example, while you’re entitled to take benefits as early as age 62, doing so will permanently reduce your benefits by as much as 30%, compared with waiting until your “normal” retirement age (currently 67 for anyone born in 1960 or later, for example).

Professional Help or DIY Tools

If you have any questions about getting your retirement plans on track or feel overwhelmed by the whole idea, professional help is available. Certified financial planners commonly deal with these issues. One type, called fee-only planners, charges you for their services on an hourly or other basis, rather than taking commissions from companies whose investments they might recommend, presumably eliminating any conflicts of interest.

You can also find an abundance of advice and calculators online from both independent sources like Investopedia and well-regarded financial services firms such as T. Rowe Price, Charles Schwab, and Vanguard.

The Bottom Line

It’s easy to get off track in planning for retirement, especially given all the other financial demands you may face during your working years. Fortunately, there are also steps you can take to remedy matters. Boosting your savings and investments, cutting your spending, or making other adjustments can get you back on track and chugging along toward the retirement you dream of.