Are You Actually on Track for Retirement?

Many people feel pretty good about their retirement plans. They’re saving something. They have accounts in place. Maybe they even check their balances occasionally. But feeling good and being truly on track are not always the same thing.

For pre-retirees—and business owners, in particular—the gap between perception and reality can be significant. Income may be high, but so are taxes, lifestyle costs, and competing priorities. Business equity may represent a large portion of net worth, but it may not be liquid or predictable. And market swings, inflation, and changing tax rules can quietly shift the goalposts.

So how do you reality-check your retirement plan without getting lost in spreadsheets or complex projections?

Here are three simple—but powerful—ways to pressure-test whether you’re truly on track.

Look at Income, Not Just Balances

One of the most common planning mistakes is focusing on how much you’ve saved instead of what that savings is likely to do for you.

A retirement account balance is just a number. What matters is how much reliable income your assets can support once your paycheck or your business income stops. Think in terms of income, not just assets. A more useful question than “How much do I have?” is: “How much monthly or annual income can my plan realistically provide?”

For example, a $1.5 million portfolio sounds impressive. But depending on how it’s invested, how long retirement might last, and how markets behave, that portfolio might support something like $55,000 to $70,000 per year of inflation-adjusted income. That could be more than enough for some households—and fall far short for others.

Now layer in other potential income sources:

• Social Security benefits
• Pensions (if applicable)
• Rental or business income
• Part-time or consulting work
• Required distributions from retirement accounts later in life
• When you add these together, you start to get a clearer picture of what your lifestyle might look like in retirement.

For a quick reality check, ask yourself:

• If I stopped working in the next few years, what would my monthly income likely be?
• How does that compare to what I spend today—or expect to spend in retirement?
• Is the gap comfortable, tight, or concerning?

If you’ve never translated your savings into income, you’re missing one of the most important lenses in retirement planning.

Check Your Plan’s Real-World Risks

Most retirement plans look great on paper, especially when markets are cooperative and assumptions are optimistic. The real test is how your plan holds up when life is less tidy.

Three risks deserve special attention:

Longevity Risk – People routinely underestimate how long retirement can last. For a couple retiring in their early to mid-60s, it’s not unusual for at least one spouse to live into their late 80s or 90s. That can mean 25 to 30+ years of needing income, adjusted for inflation. A plan that works beautifully for 20 years may be strained over 30.

Ask yourself:

• Have I stress-tested my plan for a living a very long life?
• Does my strategy account for rising costs over decades, not just a few years?

Market Risk – Bad timing matters. The order in which investment returns occur—especially in the early years of retirement—can have an outsized impact on outcomes. This is sometimes called “sequence of returns” risk.

Two retirees with the same average return can end up in very different places if one experiences major market declines early in retirement while taking withdrawals. A good reality-check question is: What happens to my plan if the market struggles in the first 5 to 10 years of retirement? Do I have enough flexibility, cash reserves, or income buffers to avoid selling investments at the worst possible time?

Inflation and Tax Risk – The quiet eroders, inflation and taxes, rarely make headlines in retirement planning conversations, but over long periods they can dramatically change outcomes.

Even moderate inflation can cut purchasing power in half over a 25- or 30-year retirement. And taxes—especially for higher-income households and business owners—can take a bigger bite than many people expect.

Reality-check questions here include:

• Is my plan built around after-tax spending, not just pre-tax account balances?
• Do I have strategies to manage taxes over time, not just in the first year of retirement?

Be Honest about Your Lifestyle

Many retirement shortfalls don’t come from poor investment returns—they come from unrealistic assumptions about spending and behavior. Some people assume expenses will drop dramatically in retirement. Sometimes that’s true, but often, it isn’t.

 While work-related costs may decline, other expenses can rise:

• Travel and leisure
• Healthcare and insurance
• Home improvements or relocations
• Supporting adult children or aging parents
• Hobbies, second homes, or passion projects

A useful exercise is to compare three numbers: What do you spend today? What do you think you’ll spend in retirement? What does your plan actually support?

If those numbers aren’t in the same neighborhood, your plan may need adjustment. The good news is: flexibility can be your hidden superpower. A strong retirement plan isn’t just about hitting one perfect number. It’s about having options.

Flexibility can show up in many ways:

• Being open to working a bit longer
• Phasing into retirement rather than stopping abruptly
• Adjusting spending in down-market years
• Choosing when and how to claim Social Security
• Deciding when to sell real estate or a business

Ask yourself:

• If my plan falls short, what levers can I realistically pull?
• If markets disappoint or expenses rise, do I have room to adapt?

Plans with adaptability are usually far more flexible than those that rely on everything going exactly right.

Bringing It All Together

If you want a simple framework to reality-check your retirement readiness, focus on these three questions:

• How much income will my plan produce, and how does that compare to my spending?
• How does my plan hold up under real-world risks like longevity, market volatility, inflation, and taxes?
• How realistic are my lifestyle assumptions, and how much flexibility do I have if things change?

You don’t need perfect answers, but you do need honest ones.

Being “on track” for retirement is not about hitting a single magic number. It’s about having a plan that can support your lifestyle, withstand real-world risks, and adapt as life evolves—especially for pre-retirees and business owners whose finances are often more complex. A financial-planning professional can help translate account balances into income, stress-test your strategy, and identify blind spots that aren’t obvious from a simple snapshot.

But even asking these three questions on your own can bring valuable clarity. Sometimes the most powerful planning move isn’t changing your investments. It’s changing how you measure whether your plan is working.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. There is no assurance that the views or strategies discussed here are suitable for all investors or will yield positive outcomes. The opinions voiced here are for general information only and are not intended to provide specific advice or recommendations for any individual. Grace S. Yung, CFP®, is a Certified Financial Planner™ practitioner and the CEO & Founder of Midtown Financial Group, LLC, in Houston. Since 1994, she has helped LGBTQ individuals, domestic partners, and families plan and manage their finances with care and expertise. She is a Wealth Advisor offering securities and advisory services through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. Grace can be reached at [email protected].For more information, visit www.midtownfg.com.