Preparing for retirement is one of the most significant transitions any person will make — yet most people approach it with more uncertainty than confidence. Many savers wonder: How do I really know if I’m ready to retire? Is it just a number in a bank account, or something deeper?
According to Jeremy Keil, certified financial planner, retirement expert, and author of “Retire Today,” the answer is more nuanced than many expect. Retirement readiness isn’t just a financial calculation — it’s a psychological shift, a lifestyle decision, and a long-term planning challenge all wrapped into one.
In a recent Decoding Retirement podcast discussion, Keil emphasized that even people who feel financially prepared often hesitate due to fear, identity concerns, or uncertainty about what comes after work. At the same time, many retirees look back and say they wish they’d taken the leap sooner.
This contradiction highlights a key truth: becoming retirement-ready requires a plan that addresses both your finances and your future self. Below are the five essential steps Keil outlines to build confidence and create a retirement plan capable of weathering decades of change — from taxes and market cycles to lifestyle shifts and health risks.
Step One: Longevity Planning — Knowing How Long Your Money Must Last
The first pillar of retirement readiness is understanding your lifespan risk — meaning how long your retirement savings must support you. Surprisingly, this is something most people get wrong.
Many assume life expectancy is the age they will die.
Keil explains this is a fundamental misunderstanding:
“Statistically, you’ll die at your life expectancy less than 4% of the time.”
Life expectancy is a midpoint — half of people will live longer, and potentially much longer. Planning only to age 80 or 85 can leave your finances vulnerable to the risk of simply outliving your savings.
Tools for More Accurate Longevity Estimates
Keil recommends using LongevityIllustrator.org, created by the Society of Actuaries, which provides personalized projections based on:
- Age
- Smoking habits
- Health
- Gender
- Marital status
Even small differences — like a woman vs a man, or a non-smoker vs smoker — can dramatically shift retirement projections by years or even decades.
Why this matters
Your longevity impacts:
- How much you should save
- How conservatively you should withdraw
- How much investment risk makes sense
- How long insurance and Social Security benefits might need to last
Skipping this step is like mapping a cross-country road trip without knowing the destination.
Step Two: Maximize Social Security — A Household Asset, Not an Individual Benefit
Social Security is the foundation of retirement income, yet only 4% of retirees optimize their benefits.
Keil calls Social Security one of the most overlooked tools for longevity protection — especially for couples.
Couples often leave an average $180,000 on the table by claiming too early or making decisions based solely on today’s cash flow.
The Three Social Security Questions You Must Answer
Keil recommends evaluating Social Security through these lenses:
- How does this protect me in old age?
- How does this help my surviving spouse?
- How does this serve as insurance against a long life or market downturns?
Why delaying often wins
While not everyone should wait until age 70, Keil notes that delaying the higher earner’s benefit often significantly boosts the surviving spouse’s long-term financial security.
He uses software such as Income Lab to test dozens of filing combinations — a process that often shows surprising results. One rule of thumb:
- Lower earner files 3 years earlier
- Higher earner files 3 years later
This approach keeps the household income steady today but materially improves survivor benefits decades down the line.
As Keil says:
“You can’t guarantee the right stock pick, but you can guarantee that Social Security claiming will raise or lower your net lifetime value.”
Step Three: Strategic Tax Planning — Minimizing Taxes Over a Lifetime
One of the biggest mistakes new retirees make is focusing on paying the least amount of tax now rather than the least amount of tax over their entire retirement.
Retirement offers a level of tax control you never had while working. Between ages 60 and 72 (or 73 under current RMD rules), many retirees experience “tax valley years” where income is unusually low — and these years can be a goldmine for long-term planning.
Roth Conversions Are a Powerful Tool
Keil suggests using low-income years to convert traditional IRA money into Roth accounts at reduced tax rates. This move:
- Shields gains from future taxation
- Reduces Required Minimum Distributions later
- Helps manage Medicare premium surcharges
- Increases tax-free income options in your later years
Tax planning isn’t just about saving a few thousand dollars — the cumulative savings over 20–30 years can exceed six figures for many households.
Step Four: Invest Strategically in Retirement — Using the Bucket Strategy
Many retirees believe they should drastically reduce investment risk once they stop working. Keil argues this is a misconception.
If you retire at 62, you could have 30 years ahead — the same investing horizon as your 30-year-old self.
This is why Keil favors the Bucket Strategy, which separates money by time horizon:
Bucket 1: Short-Term (1–5 years)
Cash and safe bonds for spending needs.
Bucket 2: Mid-Term (5–10 years)
Moderate allocation — balanced funds, conservative equities.
Bucket 3: Long-Term (10+ years)
Growth-oriented investments that hedge inflation and longevity risk.
This approach prevents panic selling, creates predictable income, and allows long-term money to grow without constant stress about market fluctuations.
Step Five: Legacy & Long-Term Care Planning — Preparing for Life’s Biggest Risks
Retirement risk isn’t just about money — it’s about uncertainty. According to Keil, retirees face three major threats:
- Living too long (longevity risk)
- Dying too soon (survivor income risk)
- Becoming too sick (long-term care risk)
A strong retirement plan must prepare for all three.
Long-term care requires advanced planning
Keil advises retirees to address:
- Where they want care (home, facility, hybrid)
- Who will provide it (family? professionals?)
- How they’ll fund it (insurance, savings, LTC fund)
Morningstar’s Christine Benz recommends creating a dedicated long-term care fund — a portion of your portfolio earmarked exclusively for future health needs.
Avoiding this topic is one of the biggest retirement mistakes people make. Denial doesn’t protect your spouse, your assets, or your future well-being.
Retirement Readiness Is a Journey — Not a Single Milestone
Becoming retirement-ready requires more than hitting a savings target or crossing a certain age. It’s about building a plan that reflects your lifespan, your income needs, your tax strategy, your investments, and your long-term health considerations — all while crafting a life you want to step into.
As Jeremy Keil emphasizes, retirement readiness is as emotional as it is financial. A thoughtful, personalized plan builds the confidence needed to transition smoothly out of the workforce and into a fulfilling next chapter.
Most retirees say they waited too long to retire — not that they started too soon. With the right preparation, the shift becomes less intimidating and more empowering. Your retirement should be a celebration of everything you’ve worked for, supported by a strategy that brings peace of mind for decades to come.
Reference : Robert Powell