Getting Started with Retirement Planning

Planning for retirement may feel like something far off. For others, it could seem like something you should’ve started years ago. Wherever you’re at, it’s always a good time to start. Retirement planning doesn’t mean having everything figured out right away. It requires small, steady steps to create the future you want.

Thoughtful planning gives you more flexibility later. Below, we’ll walk you through what to think about, how to begin, and how to adjust along the way. The earlier you start, the more room you’ll potentially have to grow your savings. It’s never too late to take action!

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Define Your Retirement Vision and Needs

Before you start thinking about specific numbers, envision what you want your retirement to look like. Do you want to travel often? Move closer to family? Stay in your current home? Everyone has different retirement goals, so consider what means the most to you. From there, you can start building a plan that fits your life.

Estimating How Long You’ll Be Retired

People are living longer. This means your retirement could last 20, 30, or even 40 years. That’s a long time to plan for, especially if you stop working in your 60s. The longer your retirement, the more you’ll need to save to cover your expenses. That’s why early planning is so important– you want your money to be there for you down the line.

Estimating Your Future Expenses

A general rule: you’ll need about 70% to 90% of your pre-retirement income each year once you retire. But this isn’t the same for everyone. Your expenses will depend on your lifestyle, health, where you live, and if you plan to keep working part-time or start new hobbies. Remember to consider big costs such as housing, healthcare, and travel when you estimate what you’ll need.

Build the Foundation: Understand Your Resources

Once you know what kind of retirement you’re planning for, the next step is figuring out what you’re working with. Look at your current savings, any retirement accounts you already have, and other sources of income. Some specific examples include:

• A pension
• Rental income
• Money from a side business or hobby you enjoy

You can also include non-traditional assets in your planning. Things like valuable collectibles, property, or skills you may use to earn extra income in retirement. Understanding your resources now helps you plan how to potentially grow them and use them in the future.

Start Saving for Retirement Now (Even If It’s Small)

Regardless of your age or income, saving something toward retirement is usually better than waiting. Starting now may give your money more time to grow, thanks to compound interest. You don’t have to save a huge amount right away. The key is to get into the habit and build from there.

Why Starting Early Matters

In theory, the earlier you start saving, the more time your money has to grow. For example, someone who starts saving $200 a month at age 25 could end up with much more by retirement than someone who starts saving $400 at age 40. That’s the power of time and compound growth working together.

Age-Based Savings Benchmarks

Try to have ambitious savings goals in mind as you move through each phase of life. These aren’t strict rules, just examples to consider:

• By Your 30s: Try to have about one year’s salary saved.
• By Your 40s: Aim for around three times your salary.
• By Your 50s: Work toward six times your salary.
• By Your 60s: Try to reach eight times your salary before retiring.

Your actual needs may be higher or lower depending on your plans, but setting benchmarks can help you stay on track.

Make Saving a Habit

Saving gets easier when it becomes part of your routine. One way to do that is by automating your contributions. You can do this through your employer or your bank. If you treat saving like a regular bill you always pay, it won’t seem like an afterthought. Even small, consistent amounts add up over time.

Explore Your Retirement Account Options

There are several types of retirement accounts. Choosing the right one for you,  may depend on your job, income, and goals. Some are offered through employers. Others you can open on your own. Understanding the basics of each can help you decide where to put your money.

Employer-Sponsored Plans

If your job offers a retirement plan like a 401(k) or 403(b), that’s a great place to start. These accounts let you contribute part of your paycheck before taxes. Many employers also offer a match, which is essentially free money. Starting in 2025, there’s a special Roth catch-up rule for high earners, so check your plan’s details. Be sure to look at contribution limits each year to stay on track.

Individual Retirement Accounts (IRAs)

If you don’t have access to a retirement plan through work, or you want to save even more, you can open an IRA. A Traditional IRA gives you a possible tax break now, while a Roth IRA lets your money grow tax-free for retirement. Each has annual contribution limits, and the best fit for you depends on your current income and future tax situation.

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Plans for Small Business Owners

If you’re self-employed or run a small business, you’ve got a few options. SEP IRAs, SIMPLE IRAs, and Solo 401(k)s are all designed with business owners in mind. These plans let you save for your future while also possibly reducing your taxable income. Some even allow higher contribution limits than traditional plans. It depends on how much you earn.

Apply Key Investment Principles to Grow Retirement Savings

Saving money is a large part of retirement planning. However, how you invest your money also matters. Your investments should be designed to grow over time and keep up with rising costs. That’s why it’s important to think about risk, diversification, and how your investment strategy might change as you age.

Aligning Investments with Life Stage

When you’re younger, you generally have more time to recover from losses during  market fluctuations, so you might lean toward investments with more risk and higher growth potential. As you near retirement, you might want to shift toward lower risk options, such as treasuries or cash. The idea is to reduce risk over time while still giving your money a chance to grow.

Inflation Risk and Long-Term Growth

Even after you retire, your money still needs to grow. That’s because the cost of living tends to rise over time. If your savings doesn’t grow enough, you might not be able to afford the same things in 10 or 20 years. Having some investments that continuously grow, while balancing safety, is key to staying financially stable throughout retirement.

Factor in Social Security and Pensions

Social Security is a big piece of most people’s retirement plans. However, the amount you receive can vary depending on when you start taking it. The longer you wait (up to age 70), the higher your monthly benefit will be. If you’re not sure what you’ll qualify for, creating a “my Social Security” account online is a good way to check your estimated benefits.

If you have a pension from a past or current job, that’s another income stream to include in your planning. Also, don’t forget to look into spousal and survivor benefits if you’re married, divorced, or widowed. These can affect how much income you’ll have in retirement and when it makes sense to start collecting.

Create a Retirement Budget That Works

Having a budget in retirement can help you feel more in control of your spending. It gives you a clear picture of what you can comfortably afford while still doing what you love. Start by looking at what you’ll need to cover each month, then adjust based on your lifestyle and goals.

A common guideline is to plan for 70% or 100% of your pre-retirement income. That range should provide you room to cover the basics and any extras like travel, hobbies, or helping family. From there, break your expenses into two main groups:

• Healthcare costs
• Debt

Plan for Healthcare Costs

Healthcare often becomes one of the biggest expenses in retirement. Even with Medicare, you’ll likely have out-of-pocket costs for things like prescriptions, supplemental insurance, or long-term care. Research different Medicare plans and consider adding a supplemental policy if it makes sense for you.

Manage Debt Before You Retire

Try to pay down high-interest debt, such as credit cards or personal loans, before you quit working. That way, you’ll have fewer bills to worry about on a fixed income. Some people also aim to pay off their mortgage before retirement, but that depends on your situation and how much flexibility you want in your monthly budget.

Keep Your Retirement Plan Updated

Retirement planning isn’t something you only do once and then move on. Life changes, sometimes in big ways, and your plan should change with it. It’s a good idea to review your retirement strategy at least once a year to ensure it still aligns with your goals and financial situation.

Major life events like getting married, getting divorced, inheriting money, or changing jobs can all impact your plan. By checking in regularly, you can make small adjustments that help you stay on track instead of being forced to make big changes later.

Work with a Financial Professional

Planning for retirement can feel overwhelming, but you don’t have to figure it out alone. A financial professional can help you sort through your options, set realistic goals, and create a plan that fits your life. They can also help you adjust your strategy as things change over time.

If you decide to work with someone, look for an advisor who focuses on retirement planning and takes the time to understand your full picture, not just your savings. You want someone who listens, explains things clearly, and puts your interests first.

Take the First Step Toward Retirement Security

You don’t need to have all the answers when you begin. The most important thing is to take the first step. That could be setting a savings goal, opening an account, or just figuring out what retirement looks like for you. Every step you take now has the potential to help you out later.

Retirement planning is a journey, and it’s okay to start small. What matters most is being consistent and staying open to adjusting your plan as life changes. Starting today puts you on the path toward the kind of future you want.

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