The Pew Research Center defines middle-class income as between $67,819 and $203,458 for a family of four. While most people in the middle-class income bracket feel comfortable retiring in some years, others aren’t sure if they have saved enough to achieve a comfortable middle-class retirement.
Remember that the amount you need to retire will depend on your current lifestyle, future expenses, dependents, and other factors. Experts suggest saving at least twelve times your pre-retirement salary.
If you’re unsure if you’re ready to have a comfortable middle-class retirement, here are 12 signs that indicate you’re on the right track.
You’ve Paid Most of Your Debts
If you’ve paid off most of your debts, you’re well-positioned for a comfortable middle-class retirement. Experts recommend eliminating or significantly reducing debt before retiring to ensure your retirement income doesn’t go toward paying off debt.
You’re Able to Live Within Your Means and Figure Out a Budget
Being able to review and budget for basic living expenses, healthcare costs, and leisure activities before entering retirement shows that one can sustain a middle-class retirement.
You Have a Diversified Investment Portfolio
Do you have a 401(k)/IRA, stocks, real estate property, ETFs, and other investments? Then, you are ready to have a comfortable middle-class retirement. A diversified portfolio across different asset classes reduces risk and maximizes potential returns.
You Have Multiple Income Sources
Another sign that you’ll retire comfortably in the middle class is having multiple sources of income. That doesn’t necessarily mean having an extra job. You could have rental income from properties, dividends from your investments, or a pension from your job. Multiple income sources give you financial stability and act as a safety net in a financial emergency.
You’re Constantly Saving and Investing
With consistent savings and investments, you’re set for a comfortable retirement. That means you regularly contribute to your IRA/ 401(k) and invest in real estate, stocks, etc. Having consistent savings means you have enough income to cover your retirement expenses and still have extra in case of emergencies.
You Have an Emergency Fund
Having an emergency fund in place is another sign of a comfortable retirement. The fund provides some financial cushioning in unforeseen circumstances like recession, sudden income loss, urgent medical emergencies, home repairs, etc.
You Can Afford to Splurge Occasionally
Being in the middle-class income bracket is often characterized by a sense of steady income. Having your expected retirement expenses well planned out and being able to splurge on things you love occasionally indicates that you’re ready to have a comfortable middle-class retirement.
The ability to afford vacations, dining out, and entertainment shows you are prepared to retire.
You Can Access Quality Healthcare
Accessing quality healthcare is part of being in the middle-class income bracket. If you can currently and in the future have access to quality medical care and can afford reliable health insurance coverage to cover medical expenses, that shows you’ll have a comfortable retirement.
You Have a Retirement Plan That You Constantly Review
If you have a retirement plan, you’re on the right track to a comfortable middle-class retirement. Additionally, your finances should keep up with your retirement plan, meaning you’re constantly contributing to your IRA/401(K), investing, or saving.
A retirement plan allows you to review your expenses to determine if you have enough to support yourself once you retire.
You Have Sufficient Retirement Savings
If you have saved at least ten times your annual salary by the time you are 65 and can live off about 4% of your investments in each year of your retirement, that’s a sign that you’ll have a comfortable middle-class retirement. These estimates allow you to cover most expenses for at least 30 years.
You’ve Thought About Long-Term Care Plan
If you’ve previously considered long-term care options and plan to cover your healthcare or assisted living costs, you’ll have a comfortable middle-class retirement.
You’re Working With a Financial Advisor on Retirement Planning
One sign that you’re ready to have a comfortable middle-class retirement is if you’ve been working with a financial expert to ensure your retirement plan aligns with your financial goals.
Working with a professional gives you a clear vision of how you want to spend your retirement years and makes it easier to budget according to your needs, including lifestyle needs, healthcare costs, hobbies, and more.
These are some of the signs that indicate you’ll have a comfortable middle-class retirement. If you’ve ticked most of these boxes, you’re on the way to building a sustainable and comfortable retirement lifestyle.
