How Is a Retirement Readiness Score Calculated?
Scores typically factor in your current savings, monthly contributions, expected returns, Social Security estimates, pension income, planned retirement age, and projected expenses. The model runs projections (often Monte Carlo simulations) to estimate the probability of your savings lasting through retirement. A score of 80%+ generally indicates you are on track.
What Can You Do If Your Score Is Low?
Common recommendations include: increasing your savings rate (especially maximizing employer match), making catch-up contributions if over 50, adjusting asset allocation for better growth potential, delaying retirement by a few years, reducing expected retirement spending, and paying off debt before retiring to lower your income needs.
How Often Should You Check Your Score?
Review your retirement readiness score at least annually and after any major life event — job change, marriage, home purchase, inheritance, or market downturn. Many employer retirement plans and robo-advisors display an updated score on your dashboard. Treat it as a compass, not a GPS — it shows direction but conditions can change.
Frequently asked questions
Are retirement readiness scores accurate?
They provide useful directional guidance but rely on assumptions about returns, inflation, and spending that may not match reality. Use them as motivational benchmarks and planning tools rather than precise predictions. Comparing scores over time is more valuable than fixating on a single number.
What is a good retirement readiness score?
Most tools consider 80% or higher as "on track." Scores between 60-80% suggest you need adjustments, and below 60% indicates significant action is needed. The specific scale varies by provider, so focus on the underlying recommendations rather than the exact number.