Retirement Income Gap: How to Know If You’re on Track for Retirement

Estimated Reading Time: 10 Minutes

Retirement planning can feel complicated, but it does not have to start that way.

One of the most important questions you can ask is simply:

Will the income I expect to receive in retirement be enough to support the lifestyle I want?

The difference between the retirement income you want and the income you expect to receive is often called your retirement income gap.

Knowing whether you may have a gap gives you something extremely valuable:

Time to prepare.

And the earlier you understand where you stand, the more options you may have.

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What Is a Retirement Income Gap?

A retirement income gap happens when the amount of monthly income you expect during retirement is less than the amount you believe you will need.

For example, imagine that you would like to have:

$6,000 per month during retirement

But your expected monthly retirement income is only:

$5,000 per month

That leaves an estimated:

$1,000 Monthly Retirement Income Gap

That does not necessarily mean you are in financial trouble.

It simply means you now have a number you can begin planning around.

Instead of wondering whether you will have enough money, you can start asking:

• Should I save more?
• Should I reduce debt?
• Should I work a little longer?
• Can I create another source of income?
• Should I adjust my retirement lifestyle?
• Are there financial or insurance strategies I should review?

The goal is not to create fear.

The goal is to create clarity.

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Start With the Lifestyle You Want

Before you begin reviewing investments, Social Security, pensions, or retirement accounts, think about your desired lifestyle.

Ask yourself:

How much monthly income would I realistically like to have during retirement?

Consider expenses such as:

• Mortgage or housing
• Property taxes
• Utilities
• Groceries
• Transportation
• Insurance
• Health care
• Prescription medications
• Travel
• Entertainment
• Home repairs
• Family activities
• Charitable giving
• Emergency expenses
• Debt payments

Some expenses may decrease after retirement.

Others may increase.

For example, you may spend less on commuting and work-related expenses, but you could spend more on health care, travel, hobbies, home maintenance, or helping family members.

You do not need a perfect number.

You need a reasonable starting estimate.

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Where Will Your Retirement Income Come From?

Next, estimate the income you believe you may receive each month.

Common retirement income sources include:

• Social Security
• Pension income
• 401(k) withdrawals
• IRA withdrawals
• Investment income
• Annuity income
• Savings
• Rental income
• Business income
• Part-time employment
• Consulting income
• Other recurring income

Add these estimated income sources together.

Then compare that amount with the monthly retirement income you would like to have.

This simple comparison can give you an initial picture of whether you may be on track.

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A Real-World Retirement Income Gap Example

Let's look at a simple example.

Imagine a married couple named Robert and Linda.

They are approaching retirement and estimate that they would like approximately:

$6,000 per month

to maintain the retirement lifestyle they want.

After reviewing their expected income, they estimate they may receive:

• Social Security: $3,400 per month
• Pension income: $900 per month
• Retirement savings and investments: $800 per month

Their estimated monthly retirement income is:

$5,100

Their desired retirement income is:

$6,000

That means they have an estimated:

$900 Monthly Retirement Income Gap

Now Robert and Linda have something they did not have before:

A clearer picture of their situation.

They can begin exploring ways to potentially address the $900 difference before retirement.

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Get Your Free Retirement Income Snapshot

You do not need complicated spreadsheets to get started.

The Retirement Income Gap Calculator can give you a quick estimate of where you may stand.

Use the Free Retirement Income Gap Calculator

Visit:

The calculator helps you compare:

Your Desired Monthly Retirement Income

with

Your Expected Monthly Retirement Income

You can include estimated income from sources such as:

• Social Security
• Pensions
• Retirement accounts
• Savings
• Investments
• Other recurring income

The calculator then gives you a quick estimate showing whether you may have:

A Retirement Income Gap

or

A Retirement Income Surplus

The calculation is not meant to predict your future.

Instead, think of it as a retirement planning snapshot.

It gives you a place to start.

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Why Preparing Early Matters

Time can be one of your greatest advantages when planning for retirement.

Imagine two people who discover that they may have a $1,000 monthly retirement income gap.

One person discovers it at age 45.

The other discovers it at age 64.

The person who discovers the potential gap earlier may have more time to consider options such as:

• Increasing retirement contributions
• Building additional savings
• Paying down debt
• Investing for long-term growth
• Delaying retirement
• Adjusting the retirement budget
• Creating additional income
• Building a small business
• Developing a side income stream
• Reviewing insurance and protection strategies

The earlier you begin, the more time you may have to make gradual adjustments.

That can be much easier than trying to solve a major retirement income problem shortly before retirement.

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What If Your Calculator Shows a Retirement Income Gap?

First:

Don't panic.

A retirement income gap is not necessarily a crisis.

It is information.

And information can help you make better decisions.

Depending on your age, finances, goals, and circumstances, you may want to consider several possible strategies.

1. Increase Retirement Savings

Even modest increases in savings can potentially make a meaningful difference over time.

If your employer offers a retirement plan, review how much you are contributing.

You may also want to review personal retirement accounts and other savings options.

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2. Pay Down Debt Before Retirement

Entering retirement with less debt may reduce the amount of monthly income you need.

Consider whether you can reduce:

• Credit card debt
• Personal loans
• Auto loans
• Mortgage balances
• Other recurring obligations

Lower monthly expenses can help reduce your retirement income requirement.

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3. Review Your Retirement Date

Working even a little longer may provide additional time to:

• Save money
• Contribute to retirement accounts
• Reduce debt
• Delay withdrawals
• Potentially increase Social Security benefits

For some people, even one or two additional working years can change the retirement picture considerably.

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4. Consider Additional Income Sources

Retirement does not always mean completely stopping work.

Many adults want a flexible retirement that combines leisure with limited income-producing activities.

Possible retirement income sources may include:

• Consulting
• Freelance work
• Part-time employment
• Online businesses
• Digital products
• Affiliate marketing
• Teaching or tutoring
• Rental income
• Small service businesses
• Coaching
• Remote work

An additional few hundred dollars per month could potentially help reduce a retirement income gap.

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Retirement Is About More Than Money

Financial preparation is extremely important.

But retirement planning should also include questions about:

• Purpose
• Lifestyle
• Health
• Family
• Housing
• Technology
• Personal growth
• Income opportunities
• Community involvement
• Travel
• Hobbies

Many adults spend decades preparing financially for retirement without thinking very much about what they actually want retirement to look like.

A successful retirement plan should consider both.

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Helpful Resource for Adults 50+

If you are 50 or older, retirement planning may involve much more than investment accounts.

You may also be dealing with questions concerning:

• Income changes
• Rising living expenses
• Technology
• Insurance
• Housing
• Health-related expenses
• Family responsibilities
• Employment changes
• Finding financial assistance
• Creating additional income

One resource designed specifically for adults navigating these issues is the:

Life Navigation System for Adults 50+ GPT

This resource is designed to help adults 50+ explore practical questions and possible next steps in areas including:

• Financial challenges
• Cost-saving opportunities
• Side-income ideas
• Technology
• Insurance education
• Housing assistance
• Utility assistance
• Prescription savings
• Lifestyle changes
• Retirement transition

Explore the Life Navigation System for Adults 50+

The goal is to provide straightforward information and manageable next steps without making the process overwhelming.

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Could a Laptop Help Supplement Your Retirement Income?

For previous generations, retirement often meant completely leaving the workforce.

Today, technology has created many additional possibilities.

Some retirees use their laptops to:

• Learn new skills
• Start small online businesses
• Freelance
• Sell digital products
• Provide consulting services
• Build websites
• Offer administrative services
• Create content
• Work remotely
• Generate supplemental income

For someone facing a modest retirement income gap, even a flexible source of supplemental income may help.

If that idea interests you, another resource worth exploring is:

Laptop Lifestyle for Seniors

This course is designed to help older adults better understand how they may use technology and online opportunities to create greater flexibility and potentially additional income.

Explore Laptop Lifestyle for Seniors

The goal does not necessarily have to be building a large company.

For some retirees, generating an extra:

$300, $500, $1,000, or more per month

could make a meaningful difference in their overall retirement picture.

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Revisit Your Retirement Income Gap Regularly

Your retirement plan should not be something you review once and forget.

Life changes.

Your income may change.

Your savings may change.

Your family may change.

Your health may change.

Your retirement goals may change.

Your expenses may change.

For that reason, consider reviewing your retirement income estimate periodically.

You may want to run the Retirement Income Gap Calculator:

• Once each year
• After changing jobs
• After receiving a raise
• After paying off major debt
• After a significant investment change
• When you begin seriously considering retirement
• After receiving an updated Social Security estimate

Watching your estimated retirement income gap shrink over time can also help you see whether the steps you are taking are moving you in the right direction.

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Your Retirement Planning Starting Point

You do not have to solve every retirement question today.

Start with four simple steps.

Step 1 — Estimate Your Desired Retirement Income

Ask:

How much would I realistically like to have available every month during retirement?

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Step 2 — Estimate Your Expected Retirement Income

Include expected income from:

• Social Security
• Pensions
• Retirement savings
• Investments
• Annuities
• Rental income
• Business income
• Other recurring income

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Step 3 — Calculate Your Retirement Income Gap

Visit:

Use the calculator to get your FREE retirement income snapshot.

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Step 4 — Decide What Action You May Need to Take

Your results may show:

No Gap

You may currently be on track based on the numbers you entered.

A Small Gap

You may have time to make manageable adjustments.

A Larger Gap

You may want to explore your options sooner rather than later.

The important thing is that you now have a starting point.

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Have Questions? Talk With Our Team for FREE

Sometimes a calculator creates more questions than answers.

You might be wondering:

• Is my retirement income goal realistic?
• Am I forgetting important expenses?
• How should I estimate my future Social Security income?
• How long might my savings need to last?
• What happens if inflation increases my expenses?
• Should I consider additional retirement income sources?
• What can I do about a projected income gap?
• How should insurance fit into my retirement preparation?

You do not have to try to answer every question alone.

FREE Retirement Income Review

After using our calculator, you can talk with our team for FREE help and guidance.

We can help you better understand your retirement income picture, discuss questions you may want to consider, and explore possible next steps.

There is no requirement to purchase anything simply to have the conversation.

Start With Your Free Retirement Income Snapshot

Visit:

Run your numbers.

Review your results.

Then, if you would like additional help understanding what those numbers may mean, reach out to our team.

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The Best Time to Start Retirement Planning?

Many people ask:

When should I begin preparing for retirement?

A simple answer is:

As early as possible.

But if you haven't started yet, the next best time is:

Today.

You don't need to know everything.

You don't need a perfect plan.

You don't need to solve every financial problem immediately.

You simply need to take the first step.

Determine where you are.

Determine where you would like to be.

Identify the gap.

Then begin working toward closing it.

A little clarity today can lead to better retirement decisions tomorrow.

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Start Your Retirement Income Review Today

1. Get Your Free Retirement Income Snapshot

Retirement Income Gap Calculator

2. Explore Additional Help for Adults 50+

Life Navigation System for Adults 50+ GPT

3. Explore Flexible Income Opportunities

Laptop Lifestyle for Seniors

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Important Educational Disclaimer

The Retirement Income Gap Calculator, this article, and related resources are provided for general educational and informational purposes only.

Calculator results are estimates based on the information entered and assumptions used. Results are not guarantees of future retirement income, Social Security benefits, pension benefits, investment returns, tax outcomes, insurance results, or financial performance.

Nothing contained in this article or calculator should be considered individualized financial, investment, tax, legal, insurance, Social Security, or retirement planning advice.

Individual circumstances vary. Consider consulting appropriately qualified professionals regarding your personal financial and retirement situation.