Do you have enough money to retire? That’s not an easy question to answer, but there are some ways to tell if you’re on track. Experts like to use the following methods to determine if you have enough to fund your desired lifestyle.

• Crunch the numbers. Map your projected income — from personal assets, earned income, pensions and Social Security — against projected expenses. This is perhaps the most accurate way to determine whether you’re financially ready. But it will require more than a weekend of number crunching.

What’s involved? On the income side, it means calculating how much you’ll receive from Social Security (and pensions if any); how much income you can safely withdraw from investment accounts earmarked for retirement (assume 2% to 4% per year); and how much income you might earn from working during retirement.

On the expense side, it means calculating how much you’ll spend on essential expenses, such as housing, health care, food and transportation, and how much you’ll need for discretionary expenses, hobbies, trips, gifts, etc.

This method, though time-consuming, is best for those 10 years or less away from retirement.

• Use an income-replacement ratio. Determine what percentage of your current salary you’d need to generate in retirement to live comfortably. Generally, advisers say you’ll need to replace 80% of your pre-retirement income. So, for instance, households that have gross incomes of $50,000, might need $40,000 of income in retirement.

Part of this exercise requires figuring out what portion of your income will come from which sources in retirement.

In 2012, the average retiree had a household income of $51,000, and Social Security accounted for 35.3% of that amount. The rest came from other sources, such as savings and earned income. So in our example of a household needing retirement income of $40,000, $14,120 of it would come from Social Security and the rest, $25,880, would have to come from savings and other sources. That means a person would need a nest egg of about $1 million, using a withdrawal rate of under 3%, to make up the gap.

• Divide assets by salary. Divide how much you’ve saved for retirement by your current salary. To be financially ready for retirement, Fidelity Investments suggests having 10 times your salary saved at retirement, eight times your salary saved by age 60, six times by age 50, three times by age 40, and one time by age 30.

• Use an online calculator. Fidelity created a tool that lets you determine how ready you are for retirement. Answering six questions at gives you a retirement score to show you how on track you are.

Other organizations have calculators, too. Those include: Ballpark E$timate and AARP.

Before using any online retirement calculator, experts suggest considering the following: Many calculators will give you a ballpark answer, but not necessarily the correct answer. That might be fine if you’re more than 10 years away from retirement, but less so if you’re not. If you’re close to retirement, there may be no substitute for using actual income and expense numbers to determine your readiness, says Chuck Yanikoski, the owner of Still River Retirement Planning Software in Harvard, Mass.

“I say that even though I am a strong believer that for people who are more than, say, 10 years from retirement, simple tools are the most appropriate, precisely because it's not possible in most cases to make financial forecasts about individual retirement 15, 20, or 40 years ahead of time,” he says.

Other things to consider when using an online retirement calculator:

  • Check and adjust, if need be, the default rates for inflation, investment returns, life expectancy and the like. Doing so should improve the odds of getting a more accurate assessment of your financial readiness for retirement.
  • Add your household’s facts and circumstances. Many calculators focus on the individual rather than the household.

Robert Powell is editor of Retirement Weekly, contributes regularly to USA TODAY, The Wall Street Journal and MarketWatch. Got questions about money? Email Bob at

Before you panic ...

So, what might you do if you’re not ready?

  • Bump up your savings rate. As a general guideline, try to save 15% or more of your income including any employer match you may have, says Fidelity. If you’re below that target, try increasing the amount you save by 1 percentage point per year. Before you can raise savings, however, you likely have to cut spending. “First, you need to cut spending on unnecessary ‘stuff.’ Only after that can you raise savings,” says Jim Otar, developer of the Otar Retirement Calculator in Thornhill, Canada. “The income pie is not unlimited. You have to cut a smaller slice elsewhere before recommending a larger slice for savings.”
  • Retire later. Retiring later gives you more time to build your savings and decreases the amount of time spent withdrawing, says Benjamin Cummings, an assistant professor at Saint Joseph's University in Philadelphia. “I think the encouragement to consider retiring later is a message we should continue hearing,” says Cummings. Others agree. “This can have a large positive impact, much larger than any asset allocation optimization,” says Otar.
  • Get help. Online tools can be helpful, but they're no substitute for a professional opinion. “(A professional adviser) can provide additional knowledge and perspective that many individuals simply don't have, and that can be very hard to replicate in an online tool,” says Cummings.