AARP Hearing Center
6 Numbers That Reveal Your Financial Health
These key figures can offer a clear snapshot of your cash flow and retirement readiness
Sjoerd van Leeuwen
Key takeaways
- Your cash flow, credit score and debt levels show where your finances stand today.
- Creditors and lenders use your credit score to assess whether you’re a good candidate for a mortgage, car loan or new credit card.
- Your Social Security statement, which you can access online, provides an estimate of your future retirement benefit.
When was the last time you assessed your financial health?
Amid rising consumer prices, mounting concerns about Social Security’s sustainability and record debt among older adults, it’s no wonder some 2 in 5 American workers worry about saving enough to live comfortably through retirement, according to the Employee Benefit Research Institute’s 2026 Retirement Confidence Survey.
More Ways to Benefit
- Related Benefit 1
- Related Benefit 2
- Related Benefit 3
- Related Benefit 4
- Related Benefit 5
Just as paying attention to your cholesterol and blood pressure can contribute to your physical health, being aware of some key indicators can improve your financial well-being. Seeing where you land along these six yardsticks can provide reassurance that you’re in good shape — or guidance on needed course corrections.
1. Monthly cash flow
Why you need to know it: To get a baseline of how much money you have coming in and going out. With one look, you can see whether you’re living within your means.
How to find it: Total your monthly expenses — everything from groceries to utilities to discretionary costs like entertainment — and subtract that amount from your monthly take-home income.
What to do with it: If your expenses are exceeding your income, it’s time to find ways to cut back on spending. A good starting point is to review your bank and credit card statements and cancel any subscriptions you no longer use. If your utility bills are high, consider making some small changes, like running your dishwasher and washing machine only with full loads to trim your water bill or lowering the temperature on your water heater to reduce your electric bill.
You could also consider getting a second job or picking up part-time work to supplement your salary. Direct any extra income to a specific goal or need, such as paying off credit card debt or building an emergency fund. “If your money is not tied to a goal, it will fly away like a feather,” says Zaneilia Harris, a certified financial planner in the Washington, D.C., area.
2. Social Security benefit estimate
Why you need to know it: Your Social Security statement provides an estimate of how much money you can expect to receive when you claim your retirement benefit. Depending on the size of your nest egg, the amount could have a significant effect on how comfortably you’ll live in your golden years.
How to find it: Log in or create an account at www.ssa.gov/myaccount. (AARP offers a step-by-step guide to setting one up.)
What to do with it: Your benefit is calculated based on the average of your 35 highest-paid working years. You can start collecting benefits as early as age 62, but many financial advisers suggest waiting. Every year that you delay claiming up to age 70, your benefit grows by 5 to 8 percent.
3. Retirement savings balance
Why you need to know it: In retirement, withdrawals from your 401(k), IRA and other savings can supplement your Social Security income. (Ditto a pension, if you’re fortunate enough to have one.) Knowing exactly how much you have in retirement savings can help you determine what changes you need to make, if any, to reach your goal, such as making catch-up contributions to retirement accounts.
How to find it: Log in to your retirement accounts and other bank accounts to check the balances. Add up the values to see the full size of your nest egg.
What to do with it: Divide the amount by 25 to see how much you could comfortably pull out of your retirement account annually. This is a variation on the 4 percent withdrawal rule that helps you estimate how long your savings will last in retirement. Let’s say there’s $250,000 in your 401(k). If you were in your 60s and quitting work today, $10,000 is roughly how much you could safely withdraw from savings in your first year of retirement.
Add that number to what you’d get from Social Security and other sources. Would it be enough to support the retirement lifestyle you envision? If not, you may want to start saving more, push back your planned retirement date or both.
4. Credit score
Why you need to know it: Lenders use this three-digit number to assess your trustworthiness as a borrower for products ranging from credit cards to auto loans to mortgages. Most creditors and lenders consider a potential borrower’s FICO score, which ranges from 300 to 850. The higher your credit score, the more likely you are to get approved for loans and the better the interest rate if you are approved.
How to find it: Many banks offer customers access to free credit score estimates. If yours doesn’t, consider signing up for a free service such as American Express’s MyCredit Guide, CreditWise by Capital One or Chase Credit Journey. Regularly checking your credit report for errors is also a good habit, but your credit report doesn’t contain your actual credit score — it’s a record of your credit history.
What to do with it: If your credit score needs a little TLC, you can take steps to boost it, such as paying down revolving credit card balances and keeping your credit utilization — the total amount you’ve borrowed on cards and other lines of credit divided by your total credit limit across all your accounts — below 25 percent, says Gerri Detweiler, author of The Ultimate Credit Handbook.
5. High-interest debt level
Why you need to know it: High-interest debt, such as credit card balances that roll over from month to month, can cost you hundreds or thousands in interest if you only make the minimum payments.
How to find it: Log onto your credit card accounts and write down the account balances and the interest rates attached to each card. Do the same for any personal and auto loans.
What to do with it: One debt payoff strategy, called the avalanche method, entails ranking all of your debts in order from the highest interest rate to the lowest. You focus on paying down the card or loan with the highest interest rate, while paying the minimum on the others. Once the highest-rate loan or card is paid off, you move on to the next one, clearing out your most expensive debt with each step.
Another option is the snowball method, where you target the debt with the smallest balance first. Once that debt is paid off, you move on to the next smallest, thus rewarding yourself with quick wins.
Whichever approach you take, don’t beat yourself up if you make a mistake. “Progress is more important than perfection,” says Jeremy Zuke, a certified financial planner in New York City.
If you’re carrying a lot of high-interest credit card debt, consider moving your card balances to a new card with a low introductory interest rate.
6. Debt-to-income ratio
Why you need to know it: Mortgage lenders use this when assessing what interest rate you qualify for — or whether you get approved for a mortgage at all. It’s a crucial number for people looking to purchase a new home or refinance an existing loan.
How to find it: Total up all of your monthly debts and divide by your monthly gross income (your income before taxes and other deductions).
What to do with it: Lenders like to see a ratio of 36 percent or less, says Odaro Aisueni, a certified financial planner in Houston. Above that, they are more likely to consider you a risk as a borrower.
The simplest way to improve your ratio is to pay off some of your revolving debts. Depending on your situation, you may want to consult a nonprofit credit counselor who can review your finances and suggest options to help you get out of debt.
AARP Membership
Join AARP for only $15 per year with automatic renewal. Get instant access to members-only products and hundreds of benefits, a free second membership, and a subscription to AARP The Magazine.
More From AARP
Helping Your Kid Buy Their First Home
From down payment gifts to mortgage cosigning, many parents are offering support
The Financial Toll of Cancer, and How to Cope
From chemotherapy and surgery to travel, cancer care can strain finances for years
These Money-Saving Hacks Don’t Work
Some cost-cutting strategies aren’t worth the hype