How to Tell If You're Still on Track to Retire in 2027

If you want to retire in 2027, there are a few tasks to complete in advance to make sure you're ready. Your last year before retirement is a critical window. This is your last chance to organize your finances, top up your retirement account, and make a solid withdrawal plan.

After all, you've likely spent decades diligently saving in a 401(k) retirement plan. When you're this close to the finish line, it's important to take the time to ensure you've hit certain financial milestones that will allow you to stop working once and for all. Here is how you'll know whether you're on track for retirement in 2027.

Your projected retirement income covers your expenses

Of course, the most important milestone you need to meet to be ready to retire in 2027 is ensuring your projected retirement income covers your expenses. Most retirees have multiple income sources, such as Social Security, 401(k) withdrawals, IRA withdrawals, pensions, small-business income, and even part-time work.

Take these numbers and add them together, considering that they may fluctuate in the future due to market or health changes. If these numbers comfortably cover your monthly expenses, you may be ready to retire in 2027. Ideally, your retirement income covers your expenses with room to spare.

You have a flexible withdrawal plan in place

Many people spend decades investing in a retirement plan but very little time developing their withdrawal plan. How you take money out of your 401(k) is just as important as how you put money in it.

Before you retire, take the time to consider what your withdrawal plan will be in the event there is a market downturn during your first year of retirement. These are significant risks to consider, as a down market during your early retirement can negatively impact your retirement income for decades. So, make a plan for what you will do in this scenario before you retire.

You've paid off high-interest debt and have a cash buffer

Another important milestone to hit before retirement is paying off high-interest debt. Bringing high-interest debt, like credit card debt, into retirement can cut into your monthly cash flow and make it challenging to maintain your lifestyle.

In addition to paying off high-interest debt, having a cash buffer is extremely important. Ideally, having a one to two year emergency fund is helpful when you're heading into retirement. That way, you have money to live on if the market drops and you don't want to withdraw your money from your retirement accounts.

You understand health care costs in retirement

Healthcare is one of the biggest expenses you will have in retirement. Fidelity data estimates that retirees 65 and older will spend approximately $172,500 on health care and retirement.

Additionally, if you retire before you're eligible for Medicare at age 65, you will need to purchase some type of health care insurance. Making sure you're planning for that cost and can afford it in retirement is a big part of being financially ready to leap.

You've confirmed you're fully vested in your workplace retirement plan

Although it seems obvious, it's still important to double-check that you're fully vested in your workplace retirement plan. Some workplaces have specific requirements that you have to work for a specific number of years before you can fully earn your employer match.

If you're not fully vested, you may not get to keep the employer portion of your match. If your employer offers any other benefits that require you to work a specific number of years, check those too. Part of being able to retire on time is making sure that all of your paperwork is in order.

You're ready to get financially organized

In addition to making sure that you're fully vested in your workplace retirement plan, getting financially organized is also important the year before you retire. That might include consolidating your accounts, making a plan for whether you will roll over your 401(k), and updating your beneficiaries. 

Completing these tasks before you retire can allow you to enjoy your golden years more.

You're willing to ask for help if needed

Finally, the last step in knowing whether you're ready to retire in 2027 is being willing to ask for help if needed. While it's not a requirement to work with a financial planner, it is important to do so if you have specific questions or want a second set of eyes on your retirement plan. 

A financial planner can review your goals, your retirement accounts, and your expenses, and can let you know whether or not you're on track to retire in the near future.

Bottom line

Most people look forward to a stress-free retirement the entire time they're working. However, to stay retired, it's important to be financially on track. 

To do so, make the right moves mentioned above, and be open to speaking with a financial advisor if you're unsure or need help with your next steps.