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Retirement planning: how to prepare for your retirement 

Use this guide to start preparing for your retirement. Consider the kind of lifestyle you want to maintain in retirement and then make a plan for it.

10 min. read
Elderly couple sitting together

As you get further along in your career and in your years, retirement emerges on the horizon. With life expectancies increasing and as the nature of work evolving, it has never been more important to be strategic with your retirement plans. It takes a lot of consideration and preparation to plan for a comfortable and fulfilling retirement.  

In this article we will discuss the steps for creating the financial security you need for a well-deserved retirement. From assessing your current financial situation to crafting a savings plan, we are here to help you make the best decisions to make progress toward your retirement goals.   

When should you start planning for retirement? 

As cliché as it may sound, the best time to start saving is now or as soon as you can. Not only will you be prepared for retirement, making your retirement plans early will help you achieve your financial goals.  

Starting your retirement plan early has multiple benefits including:  

  • The opportunity to build better saving habits early on
  • More time for your investments and savings to grow
  • The ability to set clear retirement goals and evaluate risk tolerance
  • The opportunity to maximize your employer’s contribution plan if one is available to you 

Take your future into your own hands and start your retirement planning today.  

When can you retire? 

Generally, 65 is considered the age of retirement. You are not able to access your Social Security from the government until you are 62 and you can’t make penalty-free withdrawals from your 401(k) and some other retirement accounts (such as a traditional IRA) until you are 59 and a half years old.  

You can make a financial plan to retire earlier than 65 based on your own savings and investments. The exact amount money you should have ready for retirement varies according to the lifestyle you want to have, your location, who you’re supporting, and other factors. There is no one size fits all answer for how much you will need to retire.  

However, there are some rough guidelines from experts. Some experts suggest having at least 10 times your salary available to you once you’ve retired, while others say you need at least 65% to 80% of your pre-retirement annual income available to you every year.  

How much should you save for retirement? 

It is recommended to have at least 10 times your salary ready for retirement. You should consider if this amount could be more or less based on several factors, including your preferred lifestyle, your current spending and saving habits, whether you have anyone else you are supporting, and where you plan to retire, as well as unknown factors like your life expectancy.   

Saving that much money can seem daunting but if you break down and plan based on what stage of life you are in, this goal can be more attainable.  

Here’s a breakdown of savings strategies for each age group: 

  • 20s: Set a small amount for retirement aside automatically from each paycheck. If your company offers a 401(k) or equivalent, contribute the maximum you’re allowed to, especially if your employer offers to match your contribution.
  • 30s and 40s: With 25-30 years before retirement, you will have plenty of time to make real progress with your plan. If you have kids, don’t wait until your kids have graduated to focus on setting aside money for retirement.
  • 50s and 60s:  Now is the time to really keep an eye on your investments. As age 65 approaches it is recommended that you move from 50% to 60% lower-risk investments. 
  • 65 and older: As you near 70, cut stock funds to 30% of your portfolio. If able, consider waiting as long as possible to start receiving Social Security. 

Decide what you want your retirement to look like and when you want to retire. Then use our retirement calculator to start making your plan today.  

15 steps for creating a personalized retirement plan  

When it comes to long term financial goals like planning for retirement, it can be tough to know where to start. These steps will help you assess your current situation and gather the information you need to help you move forward with your plan. 

Here are some steps in creating a retirement plan that will work for you: 

1. Assess your current situation 

Before you can start your plan, you need to know where you are starting from. Begin by assessing your current financial situation including income, savings, expenses, assets, and liabilities.  

 2. Set your retirement goals 

Now it’s time to think about what you want retirement to look like. Consider what age you want to retire at and what you want your lifestyle to be like when you are retiring. Where do you want to retire? Who will you have to support along with yourself once you do retire? These are just two of many questions you need to consider when defining your retirement goals.  

3. Calculate your retirement needs 

Now that you know what you want your retirement to look like, estimate how much money you will need to cover your costs living that lifestyle. When considering your costs factor in things like your healthcare costs, inflation, and potential longevity. 

4. Analyze your Social Security benefits 

If you want to factor in Social Security into your financial plan for retirement, you can use our calculator or visit the government’s Social Security site to get an estimate of your future Social Security benefits and see the effects of different retirement age scenarios.  

5. Contribute to employer-sponsored plans 

If applicable, make sure to keep track of your employer-sponsored retirement plans like 401(k)s that you have had throughout your employment history. And if you are currently participating in your company's 401(k), make sure to take full advantage and contribute the maximum amount that your employer will match.

6. Consider Individual Retirement Accounts (IRAs) 

Depending on your tax situation and goals, consider opening and contributing to a traditional or Roth IRA. What is an IRA? According to Investopedia, an “IRA” or “individual retirement account,” is an account that allows you to contribute your retirement funds into an account. These accounts are similar to a 401(k) except in this case, it is managed by yourself and not your employer. There are two types of IRAs: Traditional IRA, where your income is not taxed until withdrawn, and Roth IRA, where you pay the taxes upfront and can withdraw tax-free after you reach 60.

7. Create an investment strategy  

You can have other investments to help you further build your retirement fund too. Diversify your investment portfolio to manage your risk. It’s best to explore your risk tolerance by the type of risk you’re willing to take such as aggressive, moderate or conservative. You can determine your risk tolerance by aligning the time you have to invest with your planned retirement age.  

8. Contribute regularly to your accounts 

Ensure that you are always working towards your retirement goals by making regular contributions to your various retirement accounts. Remember that the more you contribute now, the more you will benefit from compound interest down the road.  

9. Make financial adjustments over time 

When you encounter major life changes or there is a change to financial markets, make sure to adjust your retirement plan accordingly. Experts recommend to periodically review and adjust your retirement plans to align with your current income, expenses, and goals.  

10. Get professional advice 

For the best results, get a financial advisor or retirement planning specialist to help you review your retirement plan to ensure its well-structured to meet your needs.  

11. Consider your healthcare costs 

When planning for retirement, it is important to consider your healthcare costs. Make sure to explore options for long-term care or Medicare.  

12. Manage your debt 

Don’t take unwanted stress with you into retirement. Before you retire, work on managing and reducing your debt.  

13. Understand the implication on your taxes 

It is important to understand implications your retirement accounts have on your taxes. Both contributions and withdrawals can positively and negatively impact your taxes. Make sure you understand these implications to optimize your tax efficiency.  

14. Consider estate planning  

Estate planning will ensure that your funds and assets get to the people you choose. Plus, it can help minimize taxes on your income, gifts, and your estate.  

15. Stay informed on financial opportunities 

Stay updated on financial trends, regulations, and investment opportunities that could impact your retirement plan by staying informed with reputable sources like the Wall Street Journal.  

“When you encounter major life changes or there is a change to financial markets, make sure to adjust your retirement plan accordingly.”
Couple sitting together looking at paperwork

Why is it important review and adjust your retirement plan? 

Your life and the financial markets are always changing. That’s why it is important for you to review your retirement plan every year to make sure you stay on track to achieve your goals while in your current situation.  

There are many things to consider during your annual review of your retirement plan and deciding whether to make adjustments. 

Here are a few reasons you might need to make an adjustment to your retirement plan: 

  • The state of the current financial markets and economic conditions 
  • Evolving investment options
  • Changes to retirement laws and tax legislation  
  • Change in employment like the loss of a job or a change in salary
  • Healthcare needs and costs 

As your retirement age approaches, you should review your retirement plan more frequently. These reviews and adjustments will make sure your plans for a peaceful retirement are solid. 

The bottom line 

When it comes down to it, planning your retirement is your job and the time to start that job is now. It is recommended that you should have at least 10 times your salary saved to retire and while that number can seem daunting to achieve, breaking it down into the steps we have discussed in this article can make this goal attainable. And don’t be shy about getting help, financial advisors can help you put together a plan that will have you living the life you dreamed of when you retire.   

Ready to start your retirement?

We’ll help you along the way.

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