Feb 15, 2026
Saving for retirement is a long-term goal, but what happens when that goal is finally in sight? Many Americans wonder whether they’ve saved enough, and there’s no one-size-fits-all number when it comes to retirement savings.
Consider Rachel, who is 55 years old, and who wants to retire at 65. She has built up around $400,000 in her 401(k) and IRA, her home is almost paid off, and based on current estimates in her Social Security account, she can expect about $1,800 a month as a baseline.
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Rachel isn’t sure whether her current savings and projected Social Security income will be enough. Here are some steps she can take in order to feel more confident about her savings goals — and what you can do to track your own financial milestones and savings plan.
The last decade before retirement is the most crucial
The ten years before retirement are often the most important — and the most risky. At 50, a drop in the stock market can quickly wipe out years of earnings, giving you less time to recover. With fewer working years left, there's not quite as much time to wait it out or invest more to cover the losses. That's why this period is often called the “retirement red zone.”
“Just as a football team can’t afford to turn the ball over and fail to score points when inside the opponent’s 20-yard line, the retirement investor can’t afford a big downturn in the retirement red zone…A bad sequence of returns immediately preceding retirement can be devastating,” says Robert Johnson, chartered financial analyst and professor of finance at the Heider College of Business at Creighton University (1).
During this period, it's important to review your retirement strategy, identify any gaps and take steps to close them or reduce your risk. The stakes are high, and the margin of error is smaller than it's ever been.
For Rachel, the first step is to determine how much she'll actually need in retirement. Some financial planners point to $1 million to $1.5 million as a general target, while others say you should aim to replace 70–80% of pre-retirement income (2).
For someone expecting $1,800 a month from Social Security, about $21,600 per year, the rest of their income would need to come from savings. At a conservative 4% withdrawal rate, a $400,000 portfolio would generate roughly $16,000 per year, before taxes.
That’s around $37,000 annually, which may be workable for some households, but tight for others, especially once health care, inflation and unexpected costs are factored in. Rachel should make a savings plan for the next ten years that factors in how much she’ll need yearly to retire.
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How to make sure you're on the right track for retirement
If you're entering the retirement red zone, there are steps you can take to ensure you're on the right track. Here's where to start:
Calculate a sustainable withdrawal rate
Many financial experts use a 4–5% withdrawal range as a starting point. This helps you calculate how long your money will last. Running the numbers now helps you understand what your savings can realistically support and whether adjustments to your plan are necessary.
Rebalance toward lower-risk investments
The red zone isn't the time to be aggressive. Work on gradually reducing exposure to high-volatility assets to protect against large losses. That means reconsidering those hot tech stocks and shifting at least some of your funds towards lower-risk investments like bonds, certificates of deposit or mutual funds.
Rethink your HSA strategy
If you have a health savings account, this decade is absolutely critical. HSAs can be powerful tools for covering medical expenses in retirement. According to the latest data, the average retiree spends between $2,700 and $6,500 a year on health care (3), even with Medicare, so preserving HSA funds — and investing them conservatively — can provide tax-free support later.
Maximize catch-up contributions
At 50, you gain access to catch-up contributions for retirement accounts. In 2026, workers aged 50 or older can contribute up to $32,500 in most 401(k) and 403(b) accounts. IRA catch-up limits allow you to save up to $8,000, with higher limits for those over 60 (4). These higher limits allow you to increase contributions during these peak earning years.
Consider professional guidance
If you're not sure if you're ready or need help deciding how to adjust, consider working with a professional. A financial advisor can help stress-test your plan, show you how different retirement dates will impact your savings and help you create a coordinated withdrawal strategy. Even a one-time planning session can give you confidence.
The final decade before retirement is when planning requires more precision. Clear milestones, conservative estimates and careful adjustments to your plan can make the difference between scraping by and a comfortable retirement.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
MarketWatch (1); Elite Income Advisors (2); RBC Wealth Management (3); IRS (4).
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Danielle is a personal finance writer whose work has appeared in publications including Motley Fool and Business Insider. She believes financial literacy key to helping people build a life they love. She’s especially passionate about helping families and kids learn smart money habits early.
