Almost everyone who sits down with us five years out from retirement arrives with the same question. Some version of: am I ready to retire? Do the numbers work?

It is the right question. It is just not the only one, and in my experience it is rarely the question that determines whether someone retires well.

I spend most of my time on the analytical side of a plan. Projections, tax sequencing, drawdown modeling, stress testing. What that work has taught me is that retirement readiness is not a single figure you clear. It is a set of answers you either have or you do not.

Below are twelve of them. Some are arithmetic. Some are tax mechanics. Three have nothing to do with money at all. Treat the list as a pre-retirement checklist. You can work through it on your own, and I would encourage you to, before you sit down with anyone.

How do you know if you are financially ready to retire?

You are financially ready to retire when your projected income covers your projected spending across a long retirement, tested against a poor market in the early years, a realistic tax picture, and a healthcare plan that covers the years before Medicare. That answer comes out of a modeling exercise rather than a rule of thumb, because those variables interact with each other in ways a single withdrawal rate cannot capture.

How to know when to retire is a related but separate question, and the honest answer is that the date tends to announce itself once the twelve answers below are in place. They group into four categories: what you will spend, how you will be taxed, what happens if something goes wrong, and whether you are actually ready for the life change.

§ GROUP ONE · THE SPENDING QUESTIONS

How much will you actually spend in retirement?

In our experience, most people underestimate their first two years of retirement spending and overestimate the years that follow. The reason is that the early years hold the deferred purchases, the travel, the house projects, and the family help that a working schedule had been quietly suppressing. Can I afford to retire is, in most households, a spending question wearing an income disguise, which is why the checklist starts here.

1. Do you know what you spend now?

Not what your budget says. What actually cleared your accounts over the last twenty four months, including the irregular items: the roof, the car, the wedding, the tuition help. In our experience, plans that fail a stress test later often do so because the starting spending figure was a guess. This is the least interesting question on the list and the one that changes the outcome most.

2. What changes in the first year?

Commuting costs disappear. Health insurance may not. Travel usually rises. Some households find retirement spending climbs for a few years and then settles. Others find the opposite. The goal is not to predict it exactly. The goal is a plan that can absorb being wrong in either direction.

3. Does the plan survive a poor first three years?

Two retirees can experience identical average returns across thirty years and end up in very different places, purely because of when the difficult years arrived. If the down years come early, while you are also drawing income, there is less capital left to participate in the recovery. A plan that only works in an average market is not a plan. We covered this dynamic, and the structures that answer it, in our piece on the first six months of retirement. For this checklist, the question is simply whether your projection has been tested against a bad start.

§ GROUP TWO · THE TAX QUESTIONS

What is the right retirement withdrawal strategy?

A retirement withdrawal strategy is the decision about which accounts you draw from, in what order, and in what proportion. It is one of the few levers in retirement that sits entirely within your control. The right sequence depends on your bracket today, your projected bracket later, and what your required minimum distributions will look like once they begin.

4. Which accounts do you withdraw from first?

Taxable, tax deferred, and tax free accounts are treated differently on the way out. The common default is to spend taxable assets first, then tax deferred, then Roth. That default leaves value on the table for a meaningful number of households. Blending across account types to fill a target bracket each year is often more efficient than emptying one before starting the next. That approach adds complexity and depends on assumptions about future tax rates and RMD rules that can change, so it isn't automatically the right call for every household. Which accounts to withdraw from first in retirement is a modeling question, not a rule.

5. How long is your Roth conversion window?

For many households, the years between the last paycheck and the first required distribution are the lowest taxable income years of their adult life. That stretch is often called the Roth conversion window, and it is where a deliberate Roth conversion strategy does its work: partial conversions before RMDs begin, capital gains planning, and bracket management. It closes on its own schedule. Knowing how many years you have inside it, and what your taxable income looks like while you are there, changes what you should be doing right now. Converting also means paying ordinary income tax on the converted amount in that tax year, so it only helps when there is cash outside the account to cover the bill and the bracket math works in the household's favor.

6. When should you take Social Security?

Claiming is not only a break even calculation against life expectancy. It affects your taxable income during the conversion window, the survivor benefit available to your spouse, and how much you need to draw from the portfolio in the early years. I would not decide it in isolation from the other eleven questions.

§ GROUP THREE · THE RISK QUESTIONS

What happens to your retirement plan if health or life goes sideways?

The three most common ways a workable retirement plan comes under strain are a healthcare gap before Medicare eligibility, an extended care need for one spouse, and the death of the higher earning spouse. All three are plannable. That is what long-term care planning and survivor modeling are for. None of them plan for themselves.

7. How will you get health insurance before Medicare?

If you retire before sixty five, you need a bridge. Health insurance between retirement and Medicare can come from employer continuation, a spouse’s plan, the individual market, or a part time arrangement that carries coverage. This is frequently the single largest new expense in an early retirement, and it belongs in the projection as an actual number rather than an asterisk.

8. What is your long-term care plan?

There are several ways to approach long-term care planning and they are not equally right for everyone. Insurance, self funding from a designated portion of assets, family arrangements, or some combination. What matters at this stage is that the plan has an answer, and that the answer has been tested inside the projection rather than assumed alongside it.

9. Does the plan still work for the surviving spouse?

This one gets skipped, and it should not be. When one spouse dies, the household generally keeps the larger of the two Social Security benefits and the other stops. That is, in broad strokes, how survivor benefits work for a spouse. Meanwhile the survivor moves to single filing brackets, and household spending rarely falls proportionally. Retirement accounts raise their own questions: a 401(k) typically passes to the surviving spouse as the named beneficiary, with choices about how to hold or move it that carry different tax consequences. A plan that works comfortably for two people can be tight for one. Run it both ways.

§ GROUP FOUR · THE READINESS QUESTIONS

Are you emotionally ready for retirement?

Financial readiness and emotional readiness for retirement are separate tests, and people clear them at different times. In our experience, the households that struggle most in the first year are usually the ones that answered the money questions thoroughly and never discussed the others.

10. What will you actually do in retirement?

More time is not an answer. It is a resource. The people who transition well tend to have something specific waiting: work that is now optional, a project, a place, grandchildren, a commitment that puts structure in the week. This sounds like soft advice. It shows up in spending patterns, in health, and in how often someone calls wanting to change a plan that was working fine.

11. Do you and your spouse have the same answer?

Answer question ten separately, then compare. It is not unusual for a couple to discover at this stage that one of them pictured travel and the other pictured being home. Both are reasonable. Discovering it before the retirement date is considerably easier than discovering it after.

12. Who do you call when the market drops sharply?

At some point in your retirement it will. The question is what happens in the seventy two hours afterward. Whether there is a plan you already agreed to, a person who picks up the phone, and a conversation that ends with you doing nothing rather than something. Presence under pressure is not a quality you can evaluate at the moment you need it. It is one you arrange in advance.

Retirement readiness is not a single figure you clear. It is a set of answers you either have or you do not.

What to do with your twelve answers

Write down where you are confident, where you are guessing, and where you have not thought about it at all. The guesses and the blanks are your agenda. That, in the end, is what a retirement readiness checklist is for. Not a grade. An agenda.

Nobody clears all twelve on a first pass. In my experience most people are solid on four or five, approximately right on a few more, and genuinely unsure on the rest. That is normal, and it is a useful starting position rather than an indictment.

What we do at Tilson Financial Group is turn that list into a projection you can test. Not a calculator output. A model that carries your real spending, your real tax picture, your healthcare bridge, and a poor sequence of early returns, so that when you decide, you are deciding on evidence.

If you want a faster first pass, our Retirement Readiness Scorecard is a short, quiz-style version of the same twelve questions. It will not replace the modeling, but it will show you where to start.

Frequently asked questions

How do I know if I am ready to retire?

You are ready when two separate tests both pass. The financial test: a projection built on your actual spending, taxes, and healthcare costs holds up even against a poor market in the early years. The personal test: you know what you are retiring to, and your spouse’s picture matches yours.

Can I afford to retire?

That depends less on a single account balance than on the relationship between your projected spending and your projected income over time. Two households with identical balances can have very different outcomes once tax treatment across account types, healthcare costs before Medicare, and the timing of market returns are accounted for.

When should I take Social Security?

It depends on your other income sources, your tax planning in the years before required distributions, and the survivor benefit available to your spouse. It is one decision inside a larger withdrawal strategy rather than a standalone calculation.

What happens to a 401(k) when a spouse dies?

In most cases the account passes to the surviving spouse as the named beneficiary, who then has choices about how to hold or move it, each with different tax treatment. The specifics vary by plan and by situation, which is why the surviving spouse scenario belongs inside the projection rather than in a footnote.

How many years before retirement should I start planning?

The tax sequencing work is most valuable in the years just before retirement and inside the Roth conversion window between retiring and required distributions, so roughly five years out is a reasonable point to begin modeling seriously. Earlier is fine. Later is workable but leaves fewer levers available.

Do I need a financial advisor to answer these questions?

You can work through most of this checklist on your own with good records and some patience. What an advisor adds is the modeling that shows how the answers interact, and a second read on the assumptions you did not realize you were making.

If you want a second read

If you are somewhere inside the five year window and you want to see what your twelve answers add up to, we are glad to talk. Real people answer the phone at our office in New Providence, New Jersey, and a first conversation carries no obligation.