Sitting on a nice balance in your 401(k)? Thinking about retiring while the markets are still up? Wondering if 2026 is the year to finally get off the exit ramp and start the next chapter of your life?
Before you join the roughly 4 million Americans who are expected to retire in the new year, you have to be sure. After all, reentering the workforce is easier said than done once we hit retirement age.
That’s why it's so important to make the right decision and to pay attention to those red and green flags that tell you to either Stop or Go.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
“You need to make sure the plan in your head, or on paper, or that ChatGPT made, can play out in a bad market year or if inflation is higher in the future,” says Pam Krueger, founder and CEO of Wealthramp.
But it's not just finances alone that determine if you're ready to retire. There’s an emotional side to this, too.
So before you decide to retire in 2026, see if you can say yes to this retirement-readiness checklist.
Are you feeling good about your retirement number?
Everybody has a number — the amount they want to save to live comfortably in retirement. As of 2025, that 'magic number' is $1.26 million, according to a closely-watched Northwestern Mutual survey. For some people, the amount they need to live comfortably once they retire is a lot more; for other people, it's less. Regardless, reaching the target that you've set for yourself could be a sign to go for it.
“Clients often have a number in their mind as the right account balance to target for them to retire,” said Christopher R. Manske, a certified financial planner and president of Manske Wealth Management. “With that specific target balance met in their accounts, they feel good about making the transition to retirement.”
Unsure what your number should be? Check out our series "Retirement Savings on Track? How Much You Should Have": 50-55, 55-60, and 60-65 to get a sense of what others in your income bracket are saving for retirement.
If you haven’t reached your number, consider working a little longer, a phased retirement where you reduce your hours, working part-time or consulting.
Can your retirement portfolio handle a correction in the market?
You’ve reached your retirement savings target, great. But can your portfolio withstand a market correction?
That’s not saying it will happen in 2026, but the markets have been on a bull run for several years, and historically, what goes up has to come down at some point.
“Let’s say your portfolio goes down 20%,” said David Blanchett, head of retirement research at Prudential. “What would that mean for your retirement? Are you ok with that?”
The last thing you want to do is retire thinking you’re in great shape only to have a market correction that throws everything off course. Should that happen, at best, you would be forced to scale back your lifestyle; at worst, you would have to go back to work.
It’s anyone's guess what is in store for the markets in 2026, but if your portfolio can't withstand a hit, “you may want to grind it out a little more,” said Blanchett.
Are you ready to leave your job?
With your finances in order, next up are your emotions. Are you ready to leave your job, the place you spent a lot of your time and energy, over many years?
For many people, their identity and self-worth are attached to their profession, and letting go is difficult. For others, it's: See-ya, Peace-Out!
“This is the year (to retire) if you are really sick of your job, you are done, you can’t do this anymore and you don’t want to do this anymore,” said Krueger. “You're not done with life, you're done with this job!”
Plus, do you know what you'll do with your free time? If you don't have a plan for that, you may want to hit pause on retiring until you do. Retiring with a clear plan for what you want to do with your time is essential to avoid becoming bored and dissatisfied.
Do you know how you’ll spend your money in retirement?
Knowing you have enough money to live in retirement is one thing; figuring out how to spend it is another thing entirely. But without a plan, Krueger said, you aren’t ready.
“You need a real income plan, and it can’t be a spreadsheet fantasy,” said Krueger. “You have to understand which account to tap first and why.”
That’s particularly true in the first five years, said Krueger. Before you retire, you need to know when to claim Social Security, which withdrawal strategy makes the most sense from a tax perspective and how to optimize your investment portfolio to protect it from inflation and a down market.
“The first five years are the most vulnerable,” said Krueger.
Are your investments earning more interest than you need?
Retiring means spending down your savings, but if the investments in your portfolio are making more income than you need, it's a great sign you can retire, says Manske.
Tapping your retirement savings can be risky, especially in a down market, because it might mean you could run out of money down the line. But if you live off the interest and dividends from your investments, the principal remains intact.
“Each year, your nest egg fluctuates in value (and typically rises in the long term), and you don’t have to sell anything because the income it produces covers all your needs,” said Manske.
Got a plan to pay for out-of-pocket health care costs?
At last check, a 65-year-old retiring in 2025 will spend on average of $172,500 in health care. That figure includes Medicare, which covers 80% of costs. But it doesn't include any emergencies or long-term care needs, which can set you back tens of thousands of dollars.
All of this is to say, planning for how you’ll cover these out-of-pocket health care costs is a box that you should check off before you leave the workforce. Testing out different scenarios to see what you can afford is also essential, said Krueger.
Have you seen a financial adviser?
If you’re still on the fence, a final way to determine if you’re ready to retire in 2026 is to bounce your plans off a professional, such as a financial adviser.
You want to make sure your plan provides sufficient funds to last twenty or more years and remains resilient against inflation, market declines and unexpected medical expenses.
“It's good to use online calculators, but it's useful to see a professional,” said Blanchett. “It's a lot less expensive than thinking you're ready for retirement and quitting your job, and you're not.”
Related Content
-
Your Guide to Buying Art OnlineFrom virtual galleries to social media platforms, the internet offers plenty of places to shop for paintings, sculptures and other artwork without breaking the bank.
-
Samsung Galaxy S25 Ultra for $4.99 a Month: A Closer Look at Verizon’s DealVerizon’s aggressive pricing makes Samsung’s top-tier phone tempting, but the real cost depends on your plan and how long you stay.
-
I'm 59 with $1.7 million saved and lost my job. Should I retire?We asked professional wealth planners for advice.
-
I'm 59 With $1.7 Million Saved and Just Lost My Job. Should I Retire at 59½, or Find New Work?
We asked professional wealth planners for advice.
-
A Wealth Adviser Explains: 4 Times I'd Give the Green Light for a Roth Conversion (and 4 Times I'd Say It's a No-Go)Roth conversions should never be done on a whim — they're a product of careful timing and long-term tax considerations. So how can you tell whether to go ahead?
-
A 4-Step Anxiety-Reducing Retirement Road Map, From a Financial AdviserThis helpful process covers everything from assessing your current finances and risks to implementing and managing your personalized retirement income plan.
-
I Drive and Collect Classic Cars: Here’s How I Got in the Game Without Spending a FortuneAre classic cars a hobby or an investment strategy — or both? Either way, the vintage car scene is much cooler and more affordable than you think.
-
The $183,000 RMD Shock: Why Roth Conversions in Your 70s Can Be RiskyConverting retirement funds to a Roth is a smart strategy for many, but the older you are, the less time you have to recover the tax bite from the conversion.
-
A Financial Pro Breaks Retirement Planning Into 5 Manageable PiecesThis retirement plan focuses on five key areas — income generation, tax management, asset withdrawals, planning for big expenses and health care, and legacy.
-
4 Financial To-Dos to Finish 2025 Strong and Start 2026 on Solid GroundDon't overlook these important year-end check-ins. Missed opportunities and avoidable mistakes could end up costing you if you're not paying attention.
-
Are You Putting Yourself Last? The Cost Could Be Your Retirement SecurityIf you're part of the sandwich generation, it's critical that you don't let the needs of your aging parents come at the expense of your future.
