Retirement Readiness Scorecard

Are you ready to retire? It’s the wrong question, because “ready” isn’t one thing. Readiness is a handful of separate questions, and a household can ace four and fail the one that sinks the plan. A scorecard is worth using only if it grades the right pieces, the ones that actually break in real retirements.

Most readiness checks reduce to “do you have enough money,” then spit out a probability of success. I think that’s close to useless. Your clients, and you, don’t ask for a probability. You ask actionable things: can I spend what I want, will a bad market wreck me, will taxes ambush me later. A good scorecard answers those.

The decision this settles

This isn’t the date calculator and it isn’t the gap estimator. Those answer one question each. The scorecard zooms out and asks whether the whole structure holds together, so you can see which dimension is weak before it costs you. A high net worth hides a lot of sins. Plenty of wealthy households are unready in one specific way, and a single number that says “92% likely to succeed” buries exactly the thing they should be fixing.

How the math works

A scorecard scores dimensions, not a single pile of money. The ones that actually decide a retirement:

• Spending coverage. Can guaranteed income plus a sustainable withdrawal fund your real spending? This is your income gap measured against your portfolio.
• Sequence cushion. Do you hold enough cash and short-term bonds to ride out a market drop without selling stocks at the bottom? This is your defense against sequence-of-returns risk.
• Tax exposure. How much sits in tax-deferred accounts that becomes forced, taxable income later through required minimum distributions, and how much room is there to defuse it first?
• Healthcare coverage. Is the gap to Medicare funded, and are future Medicare premiums modeled?
• Protection and estate. Long-term care plan, beneficiaries current, documents signed.

Each dimension scores on its own. The plan is only as ready as its weakest one, so the score is a floor, not an average. A 9 in spending and a 2 in tax exposure is not a 5.5. It’s a 2 with a tax problem to go fix.

A worked example

Take a couple, both 63, with $4M saved, $150,000 of annual spending, and roughly $70,000 of combined Social Security at full retirement age.

• Spending coverage: an $80,000 gap on $4M is a 2% withdrawal rate. Strong.
• Sequence cushion: they hold two years of the gap, about $160,000, in cash. Solid.
• Tax exposure: $3.4M of the $4M sits in traditional IRAs. Weak. Left alone, RMDs starting at 73 will force six-figure taxable withdrawals they don’t need, likely pushing them into a higher bracket and raising Medicare premiums through IRMAA.

Four green lights and one red. The single number says they’re in great shape. The scorecard says they have a roughly ten-year window, right now, to run Roth conversions in their low-income early 60s and shrink the tax bomb before it detonates. That’s the entire value of scoring the pieces separately.

The part most people miss

The dimensions interact, and that’s where a single score lies to you. Fixing one can dent another. Converting aggressively to lower future RMDs raises this year’s income, which can spike your Medicare premiums two years out and, before 65, shrink an ACA subsidy. The weak dimension and the fix for it are connected to the others by the income you report. You can’t optimize one in a vacuum.

The expensive mistake is trusting the headline number and skipping the diagnosis. A scorecard’s job is to point at the one thing to fix next, not to bless the whole plan with a percentage. Find your weakest dimension, fix it before it compounds, then run the card again. That’s readiness you can actually act on.