How to know if you have enough money to retire comfortably

TULSA, Okla. –

Retirement planning involves more than checking how much money you have saved. Understanding your expenses, accounting for unexpected costs and determining how much income you will need can help you decide whether you’re financially ready to retire.

For those approaching retirement who are worried their savings won’t be enough, there are ways to adjust their plans.

Derrick Alexander, owner of Greater Works Wealth, shared advice on retirement planning during a recent Your Money Matters segment with News On 6’s Dave Davis.

How do you know if you have enough money to retire?

Alexander recommends starting by understanding your expenses, identifying gaps between your expected income and spending, and stress-testing your retirement plan.

He breaks expenses into three categories:

Fixed expenses: Recurring costs such as a mortgage, insurance and utilities.Flexible expenses: Discretionary spending on travel, entertainment and dining out.Nonmonthly expenses: Occasional costs, such as replacing a vehicle or repairing a roof after a hailstorm.

Once you understand your monthly and annual expenses, compare them with your expected retirement income. Ideally, Social Security or a pension should cover essential expenses, while retirement savings can help pay for flexible spending and larger, occasional costs.

Alexander also recommends accounting for inflation, health care expenses, long-term care needs and potential market downturns.

What can you do if you’re nearing retirement but don’t have enough saved?

Alexander recommends considering three options: earning more, spending less or working longer.

Part-time work can provide additional income for people struggling to cover everyday expenses. However, it’s important to understand how additional earnings could affect the taxation of Social Security benefits.

Reducing spending is another option. Alexander suggests reviewing discretionary expenses, such as travel and dining out, to identify opportunities to save.

People can also evaluate short-term debt, including car payments and credit card balances, to determine whether paying it down could reduce their expenses in retirement.

How can working longer help you prepare for retirement?

Alexander recommends considering phased retirement, in which employees gradually reduce their workloads rather than leaving the workforce all at once.

For example, someone hoping to retire at 65 could talk with their employer about gradually transitioning responsibilities to other employees.

Alexander said this approach allows experienced workers to share their knowledge while easing into retirement. It can also give employers more time to prepare for the loss of an experienced employee.

Working longer may also help people maintain employer-sponsored health insurance before they become eligible for Medicare.

What should you consider before finalizing your retirement plan?

Alexander recommends looking beyond current expenses and savings to consider how the plan would hold up under different circumstances.

That includes determining how you would cover unexpected medical expenses, handle rising costs and respond to a significant market decline.

The goal is to identify potential financial gaps early and determine what adjustments might help you retire with greater confidence.