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When to stop saving for retirement

Mature couple using laptop at home
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Saving for retirement is a vital financial goal for many of us. A general rule of thumb is to put away 15% of pre-tax income to live out the future you envision for yourself and your family.

With the habit ingrained, it can be tricky to know when to stop saving for retirement. After working and building your nest egg for so long, it can feel surreal to consider the opposite—leaving the workforce by choice and living off a fixed income, turning your retirement savings into retirement spending.

A decision as big as retirement requires a leap of faith, but you can approach it prudently. The following considerations will help you gauge if you are truly ready to stop saving.

What factors should you consider in retirement planning?

Year after year, you've consistently worked to save toward your retirement goals. You've been motivated by your values: using money as a tool to support your family, making great memories with friends and giving to causes you care about, and you'll want to carry that into your planning. Now it's time to envision what you want your retirement to look like, and what you'll need to make that vision a reality.

What are your retirement aspirations?

The first factor you'll want to consider is how you see yourself living in retirement. Your lifestyle will be directly tied to how much savings you need. Some goals may include:

  • Traveling: Are there places you've always wanted to visit? Favorite destinations you'd like to revisit? Friends or relatives who live out of state?
  • Buying a home: Many people prefer to age in place, but some people's plans include downsizing to a smaller or single-story home, buying into a retirement community or buying a vacation home.
  • Charitable giving: You may want to continue giving regularly to your favorite causes.
  • Healthcare: Accessing and affording high-quality healthcare may mean budgeting for more than basic Medicare.
  • Caring for loved ones: Think about who will be in your life. Will you be supporting a spouse? Potentially caring for an elderly parent? Spending more time with children or grandchildren? Account for those relationships as you shape your retirement savings.
  • Enjoying hobbies: Some hobbies are free, while others have ongoing costs. If you love golf, tennis, crafts or sailing, you'll want to budget accordingly.
  • A plan for extended care: If a time comes when you can't care for yourself, you'll want options for the quality of care you receive and who will provide it.

How long do you need your savings to last?

The second factor to consider is longevity. While many people think about how long they'll work before retirement, too few consider how long they'll live after making that change.

The average U.S. life expectancy is 73.5 years for men and 79.3 years for women, according to 2021 CDC data. You're not a statistic, so you'll want to make an educated guess about your own life expectancy that considers your health, lifestyle, environment and genetic history.

No one wants to outlive their retirement savings or feel like they're spread too thin financially after leaving the workforce. You may want to plan conservatively so you have a financial safety net, knowing that anything you don't spend during your lifetime could become part of the legacy you leave for your loved ones, your church or your favorite charities.

Chart graphic with person thinking
How much should you have saved for retirement?
Whether you're daydreaming about retirement in the far-off
future or really starting to solidify your retirement plans,
you may be asking yourself how much you need to retire. 

Get guidelines and the factors that impact the goal you set.

Read more

How do you know if you're financially ready for retirement?

The choice to retire is often driven by feeling emotionally and mentally prepared. Only 40% of non-retirees feel confident they'll be ready to retire, according to Thrivent's 2022 Retirement Readiness Survey, and your finances can play a big role in those feelings.

It's best to go through these steps with your financial advisor. They'll explore all the nuances with you, thinking through each task with your full strategy in mind.

Calculate your retirement savings target

Ideally you'll have previously worked with your financial advisor to set a retirement savings target. Now's a time to refer back to that goal, using a retirement savings calculator to check in on your progress today.

At this stage, add up your current retirement savings, from your 401(k), pensions or other investments. Then, determine how much Social Security income you'll be able to count on. You can create an account to have access to your estimated benefit amount. The benefit amount will greatly depend on when you plan to start claiming benefits.

You'll enter these numbers into the calculator, along with your ideal retirement age, your current income and other factors to see how close you are to a comfortable retirement.

Estimate your expenses & income needs

Take inventory of your essential and non-essential expenses. Your essential expenses include housing, property maintenance, utilities, food, transportation, insurance premiums, taxes, healthcare and perhaps charitable giving.

You'd define discretionary expenses as important, but not essential to your everyday life. Common examples include travel, events, entertainment, gifts, home improvements and hobbies. With those categories in mind, consider these steps:

  • Look at your current budget and spending patterns and identify where you can make adjustments. Does your current spending reflect how you think you'll be spending in retirement? Will some expenses go away? Will you add new expenses based on your goals—like travel, for example?
  • Make a plan for your debt. For example, consider whether it makes sense to retire with a mortgage or pay it off first.
  • Think about how you'll pay for extended care expenses. One day, you may need help with activities of daily living such as dressing and bathing, and you'll want to maintain as much choice in that plan as possible.

Evaluate your retirement income plan

Assessing your income streams can help you see how well you can cover those essential and discretionary expenses. Tally up all possible income sources with these steps:

  • Plan for withdrawals and required minimum distributions to cover any gaps after receiving your Social Security income. A common guideline suggests withdrawing up to 4% each year for your retirement savings to last about 30 years. But with so many variables at play, it's worth talking through a tailored withdrawal strategy with your financial advisor.
  • Consider shifting your investment strategies if your risk tolerance has changed.
  • Do you have enough guaranteed sources of income in your retirement plan? Consider annuities or exploring using some cash value of your permanent life insurance.
  • Weigh whether you want a part-time or occasional job in retirement.

Signs it may be time to stop saving for retirement

Once you've calculated a savings target, estimated your expenses and evaluated your income sources, look for the following signs. You just may be ready to stop saving for retirement.

  • You've met—or exceeded—your retirement savings target.
  • You've cushioned your savings to help protect against unexpected healthcare or long-term care expenses and other emergencies.
  • Your asset allocation is set up to provide resilience against inflation and market volatility.
  • You're considering early retirement or changing your existing work arrangements to be more flexible.

How do I know if I can truly stop saving for retirement?

With so many decisions to make, working with a financial advisor is critical. They're qualified to make sure you aren't missing any considerations and can run various scenarios to help with your decision. A Thrivent financial advisor's expertise can help you retire with confidence and allow you to focus on the people and activities that matter most to you.

Thrivent and its financial advisors and professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.

Thrivent financial advisors and professionals have general knowledge of the Social Security tenets. For complete details on your situation, contact the Social Security Administration.