Do I have enough money to retire? Ask yourself these 3 questions to assess whether you’re ready

Today’s investors face one looming question: Will I have enough money when I retire?

Surveys show prospective retirees may have big lump sums in mind.

To get a more accurate, personal gauge, it helps to start with your planned spending, Christine Benz, director of personal finance and retirement planning at Morningstar, said Thursday during the CNBC Your Money event.

Benz is also the author of the book “How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement.”

To get a better sense of what your retirement income may look like, it helps to consider the answer to several questions, according to Benz.

One financial planning rule of thumb — the 4% rule — has been around for decades.

The idea is retirees may withdraw 4% from their investment portfolio in the first year of retirement, and adjust their withdrawals with each subsequent year for inflation.

Whether that gauge is best is a matter of fierce debate among financial planning experts.

It’s still a great place to start to understand what your retirement income may look like, Benz explained.

Start by tallying your non-portfolio assets. For many, that includes Social Security retirement benefits. For others, it may include a pension or income from other assets such as real estate.

After tallying that sum, assess how much 4% of your portfolio may add to those income sources.

“That’s a good formula to run yourself through when you’re trying to determine whether you have enough to retire,” Benz said.

Many retirees rely on Social Security benefits as a significant source of retirement income.

And surveys show many also worry that the program will not be able to provide the funding they expect when they retire. Social Security’s retirement trust fund is currently facing a 2033 depletion date, at which point projections find 79% of benefits may be payable unless Congress takes action.

If you’re over age 60, you probably won’t see big changes to the program between now and when you claim benefits, Benz said.

While eligibility for retirement benefits starts at age 62, it still pays to wait, if you can, she said.

Full retirement age — which ranges from 66 to 67, depending on year of birth — is when you may get 100% of the benefits you’ve earned.

But you can pick up about 8% more for every year you delay past full retirement age until age 70, Benz said.

You may want to adjust your claiming decision to coordinate with your spouse, if you are married, as well as consider other personal factors, such as your life expectancy.

One reason retirement is a such a big transition is workers go from having a regular paycheck to having to create income from a big lump sum of money.

It helps to think through how you will withdraw funds before you reach retirement, Benz said.

Benz prefers a bucketing strategy to help make it so funds are allocated for immediate, near-term and long-term needs.

Having at least several years of portfolio withdrawals available in safer assets can protect retirees from sequence of return risks, when taking withdrawals on investments that are down can negatively impact portfolios. That may include a combination of allocations that can hold up during equity market sell-offs, such as cash, short-term bonds and intermediate-term bonds, Benz said.

Long-term assets may be more aggressively invested in stocks to help provide growth for later in retirement, as well as assets that may eventually be passed on to heirs. Roth accounts are ideal for those assets, Benz said, as they can provide tax-free income in retirement and also limit the taxes heirs pay on inheritances.