Retirement Retirement Planning

10 Signs Your First Year of Retirement Was a Financial Success

These are the indicators that your golden years are off to a good start.

By Michelle Smith

Edited by Chris Kissell

Updated Jan. 22, 2025

After spending many years planning for retirement, you want to make sure your golden years get off to a good start. But how do you know if you are on the right path?

Luckily, a few key financial indicators can reveal whether your first year of retirement is a financial success or not. Here are 10 signs of success that you should look for.

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You are not falling into debt

Thanks to high interest rates, it's easy for consumer debt to spiral out of hand. And many seniors are at risk, with more than half of all households headed by someone 75 or older carrying at least some debt, according to the Federal Reserve.

If you have stayed out of the red during this first year of retirement, you're saving money. Avoiding interest payments will serve you well throughout your golden years.

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You are not taking too much from your nest egg

Building a nest egg gives you a pool of money to tap when you are no longer working. But that money needs to last as long as possible, which means only withdrawing what you need.

If you haven't spent more of your savings than you planned on spending this year, you're setting yourself up for a comfortable future.

You are taking advantage of Medicare

Medicare — the federal government's health insurance program for retirees and some other individuals — helps seniors access affordable health care even after they leave the workforce.

If you're already enrolled in Medicare and taking advantage of benefits such as yearly wellness checks, you're taking care of both your health and your budget.

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You have planned for long-term health needs

While Medicare can help you pay for short-term hospital stays, it doesn't cover the long-term care that many seniors end up requiring at the end of their lives.

If you've already set aside money to cover long-term care in the future, that's a key indicator you're in a good place financially — not just now but for the rest of your life.

You have life insurance if you need it

Not everyone needs or wants life insurance. Some people have no desire to secure this type of coverage in retirement.

But if you're using life insurance to leave behind an inheritance, it's a sign that you've gotten your finances in order so you can leave a lasting legacy after you're gone.

You don't feel compelled to file early for Social Security

While you can start taking Social Security benefits as young as age 62, getting benefits before you reach your full retirement age — which is now 67 for anyone born in 1960 or later — means your monthly benefit will be lower.

If you haven't felt pressured into taking reduced Social Security benefits just to make ends meet, it's a sign that your retirement is off to a good start.

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Your mortgage is small or entirely paid off

Paying off a mortgage eliminates one of your biggest monthly expenses. In fact, many retirees find this to be the costliest item in their budget.

If you've already paid off the mortgage — or plan to do so within the next few years — you're starting retirement on the right financial foot.

You have a big balance in your HSA or another source of funds for health care costs

While you can't contribute to a health savings account (HSA) once you've signed up for Medicare, you can generally use the funds you've saved previously in an HSA to pay insurance premiums or cover out-of-pocket medical expenses.

Entering retirement with money in an HSA — or simply accumulating a lot of cash to pay for medical expenses and keeping it in a savings account — ensures you can continue to pay for health care in the future. That is a great indicator that you're doing well financially.

You're enjoying your free time instead of stressing about finances

Even if you're in a great spot financially, it's normal to worry about finances at least a little bit.

But if your bills are paid and you have plenty in savings, you shouldn't have to spend hours each week fretting about finances. That is a pretty good sign you're in a comfortable spot.

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You are working a little so you can avoid spending savings

Plenty of retirees pick up a side gig to earn extra money. It's especially nice if you can make some cash from one of your favorite hobbies. For example, maybe you sell crafts online.

Others take up part-time work so they can earn a little spending money rather than taking money from their retirement savings accounts.

If you've landed a side gig so you can avoid dipping into your savings, that's a sure sign you're taking steps to secure a successful retirement.

Bottom line

As long as you keep up the healthy financial habits that led you to a successful first year of post-work living, you can likely look forward to enjoying a stress-free retirement.

Hopefully, you'll continue to spend your golden years focusing on living life to the fullest instead of wasting time worrying about money.

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