When can you retire?
Traditional retirement planning often focuses on a single question: Is your portfolio large enough to retire?
But having enough savings to support your desired retirement income doesn't necessarily mean that income is protected from future market declines.
LadderUp evaluates both your ability to support your desired retirement income and how much of that income has already been secured. Together, these measures provide a more complete assessment of retirement readiness.
How LadderUp Determines Retirement Readiness
LadderUp considers you ready to retire when two conditions are satisfied:
- Income Capacity is sufficient to support your desired annual retirement income.
- Security Ratio meets or exceeds your target Security Ratio.
Income Capacity measures the total inflation-adjusted retirement income your investments and Social Security could support. The Security Ratio measures how much of that income capacity has already been secured through your TIPS ladder and claimed Social Security benefits.
The distinction matters because having sufficient wealth to support retirement income is not the same as having secured enough of that income to feel comfortable retiring.
For example, suppose your desired retirement income is $100,000 per year and your target Security Ratio is 75%.
If your Income Capacity reaches $120,000 but only $60,000 is secured, your Security Ratio is 50%. Although you have sufficient resources to support your desired income, you haven't yet reached your target level of income security.
You would meet both retirement conditions once your Security Ratio reaches 75%, provided your Income Capacity remains at least $100,000.
This allows LadderUp to determine retirement readiness based on your individual goals and risk preferences rather than a predetermined retirement age or portfolio balance.
Estimating Your Retirement Age
Rather than assuming a fixed investment strategy, LadderUp dynamically determines the stock/TIPS allocation rule that seeks to achieve the earliest possible retirement while satisfying your retirement readiness requirements.
The model balances the growth potential of stocks against the value of converting investments into secured income. It determines how this allocation should evolve as your financial circumstances and market conditions change.
LadderUp evaluates this strategy across thousands of simulated market scenarios, each reflecting different potential paths for stock returns and interest rates. In each scenario, retirement occurs at the earliest age when both your desired income and target Security Ratio requirements are satisfied.
Because investment performance varies across scenarios, the result is a distribution of potential retirement ages rather than a single prediction. Strong market performance may allow earlier retirement, while weaker performance may delay retirement until your financial objectives are met.
Part of your retirement preferences includes your lasted acceptable retirement age. This serves as a benchmark for evaluating these outcomes, allowing you to assess the likelihood of achieving your retirement goals by that age.
Understanding Your Retirement Age Results
LadderUp summarizes the simulated retirement outcomes using several measures.
Mean Retirement Age represents the average estimated retirement age across the simulations.
Median Retirement Age represents the midpoint of the simulated retirement ages, with half of the outcomes falling above and half below this value.
Success Rate measures the percentage of simulations in which you achieve both retirement readiness conditions by your latest acceptable retirement age.
For example, a success rate of 80% means that in 80% of simulated market scenarios, you would have met your retirement readiness requirements by your latest acceptable retirement age.
These measures help you understand not only when you might retire, but also how sensitive your retirement plans are to different market outcomes.
In scenarios where the retirement conditions are never satisfied during the planning horizon, the model uses the plan's ending age for retirement-age percentile calculations. This represents an unmet retirement objective rather than a successful retirement at that age.
Social Security and readiness
Social Security is another important source of inflation-adjusted retirement income. It contributes to your Income Capacity, while benefits that have been claimed also contribute to Secured Income.
LadderUp evaluates different Social Security claiming ages to determine which best supports your retirement objectives. Delaying benefits can increase future secured income, while claiming earlier provides income sooner.
Rather than treating Social Security claiming as a separate decision, LadderUp incorporates it into your overall retirement strategy alongside the stock–TIPS ladder allocation. Together, these decisions help determine how to achieve your desired retirement income and level of security as early as possible.
Next: When Should You Claim Social Security? if you use the SS toggle — or Reading your results to interpret the output.