How Do I Know if I’m on Track for Retirement?

Retirement planning can feel daunting, but understanding the key measures of progress can help ease the journey. Whether you’re years away from retirement or it’s just around the corner, knowing where you stand is crucial. Here’s how to assess whether you’re on track and take actionable steps toward greater financial security.

Start With Your Savings Rate

Your savings rate is one of the most significant indicators of retirement readiness. Ideally, you should aim to save 20-25% of your gross income. “That percentage has certainly gone up in the last few years,” says Bill Newburn, Southside Bank Wealth Management & Trust President. “We’re encouraging people to save more because pensions have largely disappeared, and social security benefits may be reduced in the future.”

If saving at that level feels challenging, focus on gradually increasing your rate over time, building what Newburn calls the “savings rate muscle.” Starting earlier means you can save at a lower rate and let time and compounding work in your favor.

Know Your Net Worth

Tracking your net worth—your total assets minus liabilities—offers a clear snapshot of your financial progress. Commit to updating your net worth statement annually. A steadily increasing net worth is a good sign that your financial habits are working.

Determine Your Retirement Number

A common rule of thumb for estimating how much you’ll need in retirement is to multiply your annual expenses by 25. This calculation provides a target savings number that can typically sustain you through retirement using a safe withdrawal rate.

If this number feels overwhelming, remember: consistency beats perfection. Start with what you can save and adjust as your income grows.

Benchmarks and Milestones

There’s no universal benchmark for retirement savings because individual needs and goals vary. However, there are principles to keep in mind:

• Young Savers: Focus on building a high savings rate and invest consistently. Utilize strategies like the Rule of 72 to understand how compound interest can double your investments over time.
• Older Savers: Shift attention to strategy—ensure your investments are well-diversified, your risk aligns with your age, and your estate plan is in order.

Avoid Common Pitfalls

Many people underestimate the power of compound interest, which grows wealth slowly but steadily over time. “It’s like a crockpot,” Newburn explains. “We live in a microwave society, but we need patience to see results.”

Another common mistake is trying to “outsmart” the market. Instead, stick to proven strategies like maintaining a diversified portfolio and avoiding unnecessary risks.

Revisit Your Plan Regularly

Revisit your retirement plan at least once a year, especially when updating your net worth statement. Automate good financial behaviors, like monthly contributions to investment accounts, and make it harder to spend impulsively by adding friction to accessing savings.

Consider Professional Guidance

As retirement approaches, hiring a wealth advisor can bring invaluable expertise to your planning. “You’ve only retired once—we’ve helped hundreds of clients retire successfully,” says Newburn. At Southside Bank Wealth Management & Trust, we offer tools like Monte Carlo simulations, which analyze 1,000 scenarios to assess the probability of meeting your goals.

Why Choose Southside Bank?

Our wealth advisors take a holistic view of your financial situation, considering estate plans, insurance, and risk-appropriate asset allocation. We partner with you to track progress and provide personalized recommendations to help you maintain your unique retirement goals.

Planning for retirement can feel overwhelming, but you don’t have to go it alone. At Southside Bank Wealth Management & Trust, we’re here to help you stay on track and build confidence in your financial future. Schedule a meeting with one of our wealth advisors today to assess your progress and start planning for the retirement you’ve dreamed of.

The information provided in this article is for general informational purposes only and should not be construed as financial advice. Before making any financial decisions, it is strongly recommended that you consult with a certified financial planner™, attorney, accountant, or another trusted financial professional to assess your individual circumstances.

We want you to know that investment products provided by Southside Wealth Management & Trust: Are Not Insured by the FDIC or Any Federal Government Agency | May Lose Value | Are Subject to Risk | Are Not Bank Guaranteed | Are Not Deposits