You have a 401(k). You contribute every month. You’ve watched the balance grow. By every visible measure, you’re doing the right thing. And yet there’s a good chance you’re not actually ready for retirement — not in the way that matters, which is the way that means you can stop working someday and be financially fine.

Saving for retirement and being ready for retirement are two different things. The first is a habit. The second is a plan. Most people have the first without the second — and the gap between them, discovered late, is one of the most financially devastating surprises a person can face.

Here’s how to close it.

The Numbers Are Worse Than You Think

Let’s start with the data. A 2024 Transamerica Institute report found that only 16% of women workers are “very confident” they’ll be able to fully retire with a comfortable lifestyle. The median total household retirement savings for women is approximately $44,000 — enough to last roughly two years in retirement at even a modest spending level.

And according to Morgan Stanley research, women retire with about 39% less than men — a gap driven by career interruptions, years out of the workforce for caregiving, and lower lifetime earnings. Combined with the fact that women live an average of 5–7 years longer than men, this isn’t a gap. It’s a cliff.

What “Saving” Doesn’t Cover

When most people think about retirement, they think: how much do I need to save? That’s the right question, but it’s only the first one. Being genuinely retirement-ready requires answering a cluster of questions that most people — and most financial advice — skip over entirely:

• How long will your retirement actually last? If you retire at 65 and live to 90, you need to fund 25 years. Not 15. Not 20. Plan for longevity.
• What will your actual expenses be? Healthcare is the biggest wildcard. The average American couple retiring today will spend an estimated $315,000 on healthcare in retirement, according to Fidelity’s 2024 estimates — and that’s after Medicare kicks in.
• What will inflation do to your purchasing power? At 3% annual inflation, $100,000 in today’s dollars will only have the purchasing power of $64,000 in 15 years. Your plan has to account for this.
• What are you doing with your accounts after you max them out? If your answer is “I don’t max them out,” that’s the first thing to fix.
• Do you have a withdrawal strategy? Accumulating wealth and knowing how to draw it down without running out or triggering a massive tax bill are completely different skills.

The Target Number (And Why It’s Not a Number)

Financial planners often cite the “4% rule” — the idea that you can withdraw 4% of your retirement portfolio each year with a high probability of not running out of money over a 30-year retirement. This gives you a benchmark: if you need $60,000/year to live on, you need a portfolio of approximately $1.5 million. If you need $80,000/year, that’s $2 million.

But the 4% rule is a starting point, not a finish line. It doesn’t account for major healthcare events, supporting family members, market downturns at the wrong moment, or a retirement lasting 35+ years (which is increasingly common for women who retire at 60 and live to 95).

A more useful frame: think in terms of monthly income replacement, not a lump sum. What monthly income do you need in retirement (adjusted for inflation)? Then work backward to figure out what you need to accumulate. A fee-only financial planner can model this precisely for your situation.

The Tax Piece Most People Miss

Here’s something that surprises a lot of people: when you withdraw from a traditional 401(k) or IRA in retirement, you pay income tax on every dollar. If you’ve saved $1 million in a traditional 401(k), you don’t have $1 million. You have $1 million minus whatever tax bracket you’re in when you withdraw it.

Tax diversification in retirement accounts matters enormously:

• Traditional 401(k)/IRA: Pre-tax contributions, taxed on withdrawal. Good if you expect to be in a lower tax bracket in retirement.
• Roth 401(k)/Roth IRA: After-tax contributions, tax-free withdrawals. Excellent for people who expect to be in a higher bracket later, or who want flexibility.
• HSA: Triple tax-advantaged. Contributions pre-tax, growth tax-free, withdrawals for medical expenses tax-free. After 65, functions like a traditional IRA for non-medical expenses.
• Brokerage accounts: No tax advantages during accumulation, but more flexible — long-term capital gains rates are typically lower than ordinary income rates.

Most people load exclusively into traditional 401(k)s. Having a mix gives you options to manage your tax bill in retirement. Consult a CPA or CFP to optimize your specific situation.

Social Security: Don’t Guess

Social Security will likely be part of your retirement income — but most women don’t know what they’re actually entitled to, or how dramatically the claiming age affects the monthly benefit. Claiming at 62 (the earliest option) reduces your benefit by up to 30% compared to waiting until your full retirement age. Waiting until 70 increases it by 8% per year beyond your full retirement age — meaning a benefit that’s 24–32% higher than your full retirement age amount.

Check your projected benefit at SSA.gov’s My Social Security. It takes 10 minutes and should inform your planning significantly. If you took time out of the workforce for caregiving, know that your benefit is based on your 35 highest-earning years — zeros count against the average.

The Benchmark Check: Where Should You Be?

Fidelity’s savings benchmarks by age (as a multiple of your salary):

• By 30: 1× your salary saved
• By 40: 3× your salary saved
• By 50: 6× your salary saved
• By 60: 8× your salary saved
• By 67: 10× your salary saved

These are Fidelity’s published guidelines. If you’re behind, the most important step is increasing your contribution rate now and automating annual increases. Even moving from 6% to 10% of your salary can dramatically change your outcome over 20 years.

What to Actually Do Next

1. Log into your 401(k) and check your current contribution rate. If it’s below 10%, raise it — today if possible.
2. If you don’t have a Roth IRA and your income qualifies, open one at Vanguard, Fidelity, or Schwab and set up automatic monthly contributions.
3. If you’re over 50, take advantage of catch-up contributions: an extra $7,500/year in your 401(k) and an extra $1,000 in your IRA.
4. Create a free account at SSA.gov and look up your projected Social Security benefit at different claiming ages.
5. Book one session with a fee-only financial advisor (find one at NAPFA.org) to model your specific retirement scenario. It’s worth every dollar.

Disclaimer: This article is for informational purposes only and does not constitute professional financial or investment advice. Always consult a qualified financial advisor for guidance tailored to your specific situation.

Frequently Asked Questions

How much do I actually need to retire?

A common benchmark is 25× your expected annual expenses in retirement (based on the 4% rule). If you need $70,000/year, you’d need approximately $1.75 million. This is a starting point — your actual number depends on healthcare costs, longevity, Social Security income, and lifestyle.

What if I started late and feel behind?

Start now. Increase your savings rate aggressively, take advantage of catch-up contributions if you’re 50+, consider working 2–3 years longer (which dramatically increases your benefit window), and consult a financial planner to build a catch-up plan tailored to your numbers.

Is Social Security enough to retire on?

No, for most people. The average Social Security benefit in 2025 is approximately $1,907/month — enough to cover basics in low-cost areas, but not designed to be a primary income source. It should be one piece of your retirement income, not the whole picture.

What’s the biggest retirement mistake women make?

Deferring investment decisions — whether to a partner or just to “later.” Every year of delay is compounding you don’t get back. The second most common mistake: staying too conservative in investments (cash-heavy) when there are decades until retirement and time to ride out market volatility.

Should I pay off debt before saving for retirement?

It depends on the interest rate. High-interest debt (credit cards, 20%+ APR) should be paid aggressively. For lower-rate debt (student loans, mortgages), maintain minimum payments and invest simultaneously — the long-term return on retirement investments typically exceeds the interest cost of carrying lower-rate debt.