Important Considerations When Preparing for Retirement

Retirement doesn’t take care of itself. To feel financially secure later in life, you need to plan, set money aside, and make thoughtful decisions over time. That might sound overwhelming at first, but getting started early can make a big difference. And even if you’re coming to it later in life, it’s still possible to make progress with the time you have.

The idea isn’t to aim for perfection—it’s about being realistic, knowing what you want, and working toward it step by step.

In this article, we’ll walk through what retirement planning means and cover some of the key things you’ll want to think about along the way—from saving strategies to how your needs might change over time.

What Is Retirement Planning?

Retirement planning is about figuring out how you’ll support yourself financially when you stop working. It starts with setting clear, long-term goals for your retirement years—like when you want to retire, what kind of lifestyle you want, and how much risk you’re comfortable taking with your money.

You can start planning at any point during your working life, but doing it earlier gives you more time to save and adjust along the way. The main parts of a retirement plan include figuring out where your income will come from (like savings, pensions, or Social Security), tracking your expected expenses, and creating a savings plan that fits your goals.

When Can You Retire?

There’s no one-size-fits-all answer to when you can retire. It really depends on two things: when you want to stop working, and whether you’ve saved enough to support yourself without a paycheck.

You can start collecting Social Security as early as age 62, but doing so means getting a reduced monthly benefit. If you were born in 1960 or later, your full retirement age—the point at which you get your full Social Security benefit—is 67. If you can wait even longer, your monthly benefit continues to grow until age 70.

Of course, not everyone sticks to these ages. Some retire early, either by choice or due to health or job changes. Others keep working longer—sometimes because they enjoy it, other times because they need the income or the health coverage.

For many, retirement doesn’t happen all at once. A gradual transition, like working part-time or taking on flexible roles, can be a practical way to shift into retirement while still earning some income.

The thing is, you must understand your financial picture and your personal goals, then decide what timeline makes the most sense for you.

How Much Money Will You Need to Retire?

There’s no accurate answer to this—it depends on your lifestyle, health, and how long you expect to be retired. Still, some general guidelines can help you estimate a target.

Some people aim for $1 million in retirement savings. Others follow the 80% rule, which suggests you’ll need about 80% of your current income each year after you retire. So, if you earn $100,000 a year now, you’d want to plan for about $80,000 per year in retirement. Over 20 years, that adds up to around $1.6 million.

That said, not everyone will reach those numbers—and that’s okay. What matters more is understanding your own financial needs and planning around them. Many people find they need to adjust their lifestyle or work longer to close the gap.

Start With Your Expenses

The best way to estimate how much you’ll need is to build a rough retirement budget. Start by listing your expected costs—housing, healthcare, food, insurance, clothing, and transportation. Then think about extras like travel, hobbies, or helping out family.

Even if you can’t pin down exact amounts, having a ballpark estimate will help you make better decisions about saving and spending now.

Planning with real numbers, based on your own life, not only helps set clearer goals, but also helps you feel more in control of your future.

10 Important Things to Consider When Preparing for Retirement

Here are the top 10 ways to get yourself retirement-ready:

1. Save now

If you haven’t started saving for retirement, now’s the time. It doesn’t matter how young (or old) you are. We know that it’s hard to think about retirement when you’re say 22 or 25-years old, but that’s the best time.

The more time your money has to grow, the more money you’ll have in retirement. As you make contributions, they will have earnings. Once your earnings start earning, you’re on the right track. Remember, a dollar today is worth a lot more 20, 30, or 40 years from now thanks to compounding earnings.

If you haven’t saved yet and you’re closer to retirement than not, take advantage of ‘catch-up contributions.’ For 2025, the IRS allows individuals aged 50 and over to contribute an additional $7,500 to their 401(k) accounts. Moreover, under the SECURE 2.0 Act, individuals aged 60 to 63 can make a higher catch-up contribution of $11,250 to their 401(k) plans. For IRAs, the contribution limit remains at $7,000, with an additional $1,000 catch-up contribution for those aged 50 and over.

2. Calculate What You’ll Need in Retirement

As mentioned, retirement can cost more than people expect. Many financial experts suggest you’ll need about 80% of your income from your working years just to keep up with the same lifestyle. That number might change depending on your plans, health, and living situation, but it’s a good starting point.

But the important thing is, don’t leave it to chance. The earlier you figure out what you might need, the more time you have to prepare. Taking an honest look at your future expenses—like housing, healthcare, food, and travel—can help you set a savings target that actually fits your goals.

Planning puts you in control. It’s a way to stay clear on what you want and how you’ll get there.

3. Reassess your Allocations

When you’re young, you can make aggressive investments. If the market tanks, you have plenty of time to recoup the loss, but if the market does great, your retirement account has even more time to let your earnings make earnings.

As you age, though, your risk tolerance changes. The closer you get to retirement, the less risk you can take simply because you don’t have the time to recoup any losses. Each year, reassess your allocations, using your goals and timeline as a judge.

Reallocate as necessary to keep your portfolio on track for your desired retirement without getting too conservative.

4. Pay off Debt

You don’t need to debt-free when you retire, but bringing in too much debt isn’t a good idea either. Take care of all credit card debt long before you retire. The high-interest rates take away from your retirement income, making it hard to stop working and/or enjoy retirement. If you can, pay off your mortgage before retirement too. This reduces your cost of living, making your retirement funds last longer. No one wants to outlive their retirement funds!

5. Diversify your Investments

No one can predict the future. Historically, the stock market usually has a positive return over 10 years, but there are no guarantees.

Diversifying your investments so you don’t have all your assets in one category is essential. Investing only in the U.S. stock market puts you at risk of a total loss. Instead, consider including bonds, commodities, real estate, and even foreign investments.

6. Watch the Fees

Managing your retirement fund may seem overwhelming, so you might delegate it to your 401(k) sponsor or an advisor. While the peace of mind is nice, the fees can be substantial. Determine how much an account will cost you in commissions, management fees, and other miscellaneous charges.

If you don’t, before you know it, you’ll have less money available for your retirement because you paid others to manage your investments.

7. Lower your Cost of Living

As you get closer to retirement, look closely at your cost of living. Hopefully, your children are out of the house at this point, so that helps decrease your expenses quite a bit. But look closely at your other expenses. What else can you eliminate or lower to make it more affordable?

If you plan to travel the world, move to another part of the country, or start a business, figure out how it affects your cost of living. How much will you need, and does it align with what you’ve saved thus far for retirement?

If your new plans don’t jive with the current savings, revamp your plan to accommodate the new plans.

8. Have Insurance Plans in Place

No one likes to think of the worst happening, but it’s the only way to protect ourselves. Car, health, life, and disability insurance are all key components of your retirement plan. While you don’t want to go into debt paying insurance premiums, finding the right policies will protect your assets.

For example, if you fell ill or were injured and couldn’t work anymore, how would you save for retirement? Disability insurance may help supplement or replace your income so you can keep your retirement savings on track.

9. Maximize your Contributions

The IRS allows employees to contribute up to $23,500 to a 401(k) account in 2025. On top of that, your employer may match your contributions up to a certain limit. At the very least, maximize your contributions to get the employer match.

For example, if your employer will match dollar-for-dollar up to 4% of your income and you make $60,000, contribute at least $2,400 to get the employer match. But contribute as much as you can in addition to it to keep the earnings growing.

10. Don’t Be Afraid to Ask Questions

These tips can help you get started, but they’re just the beginning. To make real progress with your retirement planning, you’ll need more details—and that means asking questions.

Talk to people who can help: your employer, your bank, your union (if you’re part of one), or a qualified financial adviser. Ask about your retirement options, how your benefits work, and what steps you should take next. And don’t just nod along—make sure you truly understand the answers.

The more informed you are, the better decisions you’ll be able to make. Getting clear, practical advice now can help you avoid stress and confusion later.

Conclusion

Retirement planning isn’t just about hitting a savings target—it’s about building a financial foundation that supports the life you want later on. Whether you’re just starting out or fine-tuning your approach as retirement gets closer, the key is to stay engaged with the process. Review your plans regularly, keep learning, and adjust when needed.

You don’t have to do everything at once, and you don’t have to have all the answers right away. But taking small, steady steps—saving a little more, asking the right questions, paying attention to your spending—can add up over time.

What matters most is having a plan that makes sense for your goals, your income, and your timeline. The earlier you start, the more options you’ll have. And even if you’re starting later than you’d like, you can still make meaningful progress with the time and resources you have.

Frequently Asked Questions

How much money do I need to retire comfortably?

It depends on your lifestyle and health needs, but a common rule is to aim for 70–80% of your pre-retirement income each year. A financial advisor can help you find a more accurate goal based on your situation.

When should I start saving for retirement?

The sooner, the better—starting in your 20s gives your money more time to grow. Even if you begin later, increasing your savings and using accounts like 401(k)s and IRAs can still help you build a solid plan.

What are the best ways to save for retirement?

Use a mix of savings tools: 401(k)s (especially with employer match), IRAs, and investment accounts. Your ideal strategy depends on your age, risk comfort, and future goals.

How can I make sure I don’t run out of money in retirement?

You can lower the risk by delaying retirement, managing your spending, and keeping a diverse investment portfolio. Regularly reviewing your plan also helps you stay on track.

What should I know about healthcare costs in retirement?

Healthcare can be costly, so plan for expenses beyond Medicare, like long-term care. Look into Medigap, Medicare Advantage, or an HSA to help manage these out-of-pocket costs.

Important Considerations When Preparing for Retirement