How to financially plan for your retirement

Retirement planners offer specialized advice on the distribution of funds

How to financially plan for your retirement

A qualified retirement planner will have a skill set that goes beyond basic financial planning or providing investment advice.

Key Takeaways

  • Retirement planners are a subset of financial planners with expertise in retirement issues like retirement account withdrawals and Social Security benefits.
  • Retirement planners differ in fee structure; some may charge an hourly fee, others charge flat fees, and others charge commissions or a combination of fees and commissions.
  • There may be overlap between retirement planning and other forms of financial planning or investment advice, but it depends on the individual planner you work with.

What Does a Retirement Planner Do?

Like financial planners, retirement planners must understand your financial goals. They need to know when you will need your savings and on what you will be spending.

In addition, a retirement planner must have a clear understanding that the financial assets you are accumulating, as well as other resources you have such as pensions, Social Security, part-time work, home equity, etc., are all pieces of a puzzle that must be put together in a way that will result in reliable monthly paychecks once you are retired. This regular income planning requires an in-depth knowledge of taxes, Social Security, and retirement plan rules. Such knowledge often requires years of experience and training to accumulate.

What Type of Advice Can a Retirement Planner Give Me?

A retirement planner or advisor will be able to offer advice on:

  • When to take Social Security benefits in a way that is best for you
  • What pension distribution choices are right for you
  • If an annuity is a suitable investment for you
  • Which accounts to take withdrawals from each year, and in what amounts, to minimize the retirement taxes you will pay
  • The amount of retirement income you could reasonably expect to have
  • What withdrawal rate is appropriate when taking money from a traditional portfolio
  • How much of your money should be in guaranteed investments
  • What types of taxable income your investments will generate
  • How you can rearrange investments to reduce taxable income in retirement
  • Whether you should leave your money in your company plan or roll it into an IRA account
  • If you should pay off your mortgage before or during retirement
  • If a reverse mortgage is a good option for you
  • If you need long-term care insurance
  • Whether you should keep your life insurance policies or not

Good retirement planners will not make recommendations until they understand your expected time horizon, your level of experience with investments, your goals, and your tolerance for investment risk. They will also want to understand your need for guaranteed income and get a thorough understanding of all your current resources such as assets, liabilities, and current and future sources of income.

Good retirement planners will want to know where all your investments are so that your portfolio, as a whole, will make sense and can be optimized to produce a steady stream of retirement income.

How Much Do Retirement Planners Charge?

Retirement planners may charge in any of the following ways:

  • An hourly rate
  • A flat fee to run a retirement income plan or retirement cash flow projection
  • A quarterly or annual retainer fee
  • A percentage of assets that they manage on your behalf
  • Commissions paid to them from financial or insurance products you buy through them
  • A combination of fees and commissions

Always ask a potential retirement planner for a clear explanation of how they will be compensated.

What About Traditional Financial Planning or Investment Advice?

As an area of expertise, retirement planning falls under the broader category of financial planning. However, it requires greater knowledge.

Investment advice is related to how your money is invested, but those who offer investment advice may not offer much planning. Many retirement planners will offer investment advice as well as a broader range of financial planning services, but it doesn't always work the other way around.

How Do I Find a Good Retirement Planner?

As you interview potential planners, seek someone who has expertise in tax planning, Social Security, and retirement withdrawal strategies. They need to be able to devise a timeline and plan that tells you how to take money out in a tax-efficient way, and they need to be able to objectively advise you on the use of guaranteed income products that can create security.

One option is to check out RIIA, the Retirement Income Industry Association. This group offers a designation called an RMA, or Retirement Management Analyst. If you want someone specializing in retirement planning, I would advise you to look for someone with an RMA designation, although currently, there are only a few scattered throughout the country.

How to financially plan for your retirement

Even if you’re young, retirement will arrive faster than you expect. If you’re not in a career you love, you might even feel like retirement can’t arrive quickly enough. Even more concerning is the idea that if you’re not financially ready for retirement, you could spend your “golden years” struggling to stay afloat. Fortunately, there are ways you can more easily avoid that risk and financially plan for retirement. Here are five issues to consider when you’re making those retirement plans.

1. Understand the Differences Between Savings and Income

Having a savings account or other investment vehicle is a great idea. You want to have saved as much as possible before you retire, so you can be ready to stop working and enjoy whatever you have planned in your later years.

Savings, though, is not the same as income. If you don’t still have any money coming in, your savings could eventually be depleted. Because you don’t want that worry hanging over you in older age, you need both savings and income.

One way to generate more income for your retirement planning is by opening accounts that provide you with strong returns over time. Scottsdale Bullion and Coin suggests that you consider transforming part of your retirement investments into a tax-deferred asset through the creation of a precious metal IRA. Precious metals such as gold can increase in value at a much stronger rate than more traditional investment vehicles.

2. Pay Off Debt

Debt is a problem for most people, from early adulthood through middle age and beyond. However, when you go into your retirement years with debt, the struggle can become even more significant. Therefore, it’s very important to factor in a debt repayment plan before entering retirement.

Cars, homes, student loans, credit cards, and other types of debt should all be paid off before your retirement date. Then, all you need to be concerned with in your later years are normal household bills, along with standard purchases and anything extra you want to spend money on (travel, family, etc.).

3. Apply for Government Benefits

It’s important to know what kinds of benefits you’ll be able to receive from the government in retirement. Social Security and Medicare may be very important to you, depending on what other income streams and insurance options you have. However, it’s often best to delay receiving Social Security, if possible.

Those who put off drawing on their Social Security benefits will get more per month—all other things being equal—than those who claim it early. If you’ve successfully planned for retirement, you shouldn’t have to take your Social Security benefits too early.

4. Budget for the Future

The cost of long-term care is rising, and nearly 70 percent of people who live past the age of 65 will eventually need this type of care. Some will require it for a number of years. With that in mind, you should financially plan for retirement in a way that takes into account as many different scenarios as possible.

Long-term care insurance can be a good choice for retirement planning. You can also consider investments that will pay strong dividends, as these can be used to pay for long-term care, as well. Assuming that you won’t need this type of care could leave you struggling in retirement, so it’s much better to plan for the possibility.

5. Attend to Legal Matters – Insurance, Wills, Power of Attorney

Getting your affairs in order is another excellent way to handle financial planning for retirement. Go through your will and make sure there aren’t changes you’ve put off making. Also, consider what kind of insurance policies you have, how much they’re for, and whom you have for beneficiaries.

If you have a power of attorney (POA), make sure you’re comfortable with the person you’re giving control to. If you aren’t, or you don’t have a POA, now is the time to get one ready. The odds are that you’ll enjoy many happy years in retirement, but it’s better to take care of things sooner, rather than later.

Attending to legal matters early will help ensure that your retirement will be comfortable, and that you won’t have to worry about money as you age. As you get closer to retirement, you can assess how much you’ll have in terms of savings and income. You can also take a look at your debt levels and see what you might need to change to pay off debt before you retire.

No matter how young you are, it’s never too early to start planning for retirement. If you start budgeting and preparing now, you’ll be ready to live comfortably when you reach an age where you want to retire. Then, you can move confidently away from the workforce and into all the joy and adventure your later years will have to offer you.

For many, the idea of retirement means easing into a more relaxed lifestyle, having time to enjoy the things we love such as our hobbies, family and friends, travel, and recreational activities. However, for many approaching retirement, apprehension and worry about the ability to afford retirement is a very real concern. Luckily, there are some steps you can take to ensure a financially secure retirement.

How to financially plan for your retirement

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Table of Contents

The Employee Benefit Research Institute reports that 54 percent of American workers have saved less than $25,000 for retirement and about a third of them feel that they will have enough for a comfortable retirement.

Is that realistic?

How much should you have saved?

What if you’re barely making ends meet now?

What can you expect from social security?

Can you afford long-term care?

If you’re still working and earning money, it’s not too late to get ready for retirement. In the end, it’s all about being smart with your money and paying some attention to how you use it, save it and where you hold it.

In this article, we’ll break down seven simple steps to help you get to a financially secure retirement plan:

  • Calculate How Much Money You Will Need to Retire
  • Saving Your Money
  • Cutting Your Expenses
  • Investing Your Money Wisely
  • The Right Time for Social Security
  • Pick Your Retirement Date
  • Consider your Home

It’s a personal question that starts with understanding what your day-to-day expenses will be.

How Much Money Will You Need for a Financially Secure Retirement?

This is the magic question. How much will I need for a retirement income? It’s a personal question that starts with understanding what your day-to-day expenses will be. Remember: you will spend less on some things and may spend more on others. One of the first steps in planning for retirement is getting a handle on what your day-to-day expenses will be. Make note of fixed expenses like rent or mortgage (if you have any), pharmacy, groceries, utilities, insurance, and taxes. Then you have discretionary expenses like spending on gifts, clothing, entertainment, and travel. Remember that some expenses related to work can be reduced such as commute expenses.

Realistically, you should factor higher medical expenses because as we age we are more vulnerable to developing chronic and serious medical problems. You need to evaluate your health care coverage make sure you have enough coverage. When you become eligible for Medicare you should consider supplement medical coverage since Medicare doesn’t cover all medical expenses. Unexpected out-of-pocket medical expenses can devastate your savings and create debt during retirement. Take some time to understand the cost of purchasing extra medical coverage and factor that into a financially secure retirement budget.


How to financially plan for your retirement

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Ideally, you should be saving 10–15% of your gross income for retirement.

Saving Your Money

Ideally, you should be saving 10–15% of your gross income for retirement. If you work in a company where your employer matches your retirement contribution then you can adjust your saving amount to add up to 10–15% of gross pay (for example, you get 3% then you can save between 7–12%). If you’re just getting started, you can start with a lower amount. If you start by saving say 5%, plan to bump up 1% or even 2% in the following year so you don’t really shock your budget. Boosting your contribution each year, you’ll get to the 10–15% level within 5 years.

The savings plan should be an employer-sponsored plan like a 401(k), 403(b), or SIMPLE IRA. Note that 401(k)s, 403(b)s, 457s, annuities are not subject to current income tax as they are tax-deferred. Otherwise, open an IRA that allows for automatic contributions (automatic withdrawals from your bank account to the IRA on a scheduled day like your payday). It’s never too late to start saving. Just start off with a scheduled withdrawal schedule and plan to increase over time to get to your saving goal.

Cutting Your Expenses

Now that you’re putting money aside, you may feel an uncomfortable gap in your bank account but there is way, to get around that with some honest evaluation of your expenses. There are probably a few things you can find right off the bat that you can cut back on. The best way to start is to create a detailed list of your spending (collect your receipts, bills, and banking statements) and see exactly where your money goes. There are always unexpected expenses, but what about the every day and regular things? Smart spending on the little things can add up. For example, splashing out on one specialty coffee a week instead of five, bringing lunch most days, and reserving a lunch out once a month can soon add up. Saving on electric bills, gas bills, and phone bills can add up as well. What you save can add up to more than what you’re actually putting aside for retirement savings.

Your retirement savings shouldn’t be a mystery; you simply need to understand how it is invested so you know if it’s working to your best advantage.

Getting ready for retirement? Planning for a financially secure retirement can be overwhelming and confusing. Making sure you’ve got the right things in place and preparing ahead of time for a secure retirement can save you from unexpected disappointments and unpleasant surprises. If you’re getting started or just want to confirm if you’re on track with your financial retirement plan, we’ve pulled together handy Retirement Financial Planning checklists to help you better prepare and be ready for your retirement.

How to financially plan for your retirement

Table of Contents
Table of Contents

Check Your Retirement Income Sources

Making sure you’ve got the right things in place and preparing ahead of time for a secure retirement can save you from unexpected disappointments and unpleasant surprises.

Where will the money for retirement come from? How much will each source provide and for how long? Confirm what retirement savings and income sources you can count on such as the following:

  • Social Security — You can get estimates of your benefits (retirement, disability, and survivors benefits) by visiting the Social Security Administration’s “my Social Security“ website and creating an account (get someone to help if necessary). Once you’ve done that you will have access to your benefit estimate and earnings statement as well as Medicare taxes you’ve paid.
  • Pensions — To find out about your pension you can use a few helpful resources such as:
    • Labor Department’s Employees Benefits Security Administration (toll-free number 866-444-3272).
    • Pension Rights Center website
    • American Academy of Actuaries’ Pension Assistance List (offer free assistance to individuals interested in checking their pension plans’ calculations)

    How to financially plan for your retirement

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    Figure Out How Your Retirement Income Will be Taxed

    The taxes on your various sources of retirement income need to be confirmed so you can have a realistic idea of your retirement income.

    The gross-value of your retirement income is often (mistakenly) used by many to estimate what money they will have available. The taxes on your various sources of retirement income need to be confirmed so you can have a realistic idea of your retirement income. You don’t want to be surprised and left short when the time comes for retirement.

    Social Security Income

    Social Security income may be taxable depending on the amount of other retirement income you have. You may have to include up to 85% (ranges from zero to 85%) of Social Security benefits on your tax return as taxable income. A tax worksheet formula takes into account your ‘combined income’ to determine how much your benefits will be taxable each year.

    Having a high amount of monthly pension income can result in a high tax on Social Security benefits. Only those the other hand, a retiree with virtually no other retirement income, will most likely get their Social Security benefits tax-free and not pay income tax.

    IRA and 401(k)

    Withdrawals from retirement accounts are taxable. This means IRA withdrawals, as well as withdrawals from 401k plans, 403b plans, 457 plans, etc., will be considered taxable income. Again, the amount of tax you pay depends on your total income, which deductions you have and the tax bracket you fall into that year. For example, if you have significant medical expenses, you will also have more deductions than income so you may not need to pay tax on those withdrawals during that year. Keep in mind Roth IRA withdrawals are tax-free if done correctly.


    When calculating whether your pension income is taxable, you need to check if the money went in pre-tax or after paying taxes. Most pensions accounts were paid in with pre-tax income so will be counted as taxable income on your income tax report. If you already paid tax on the money you put into your pension, then you won’t pay again in retirement.

    How to financially plan for your retirement


    How to financially plan for your retirement

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    A fixed or variable annuity is set up so when you take withdrawals, you initially receive the part from earnings or investment gain and is considered as taxable income.

    Annuity Distributions

    There are various types of tax rules depending on the type of annuity you have. An IRA or another retirement account annuity is taxed differently than if you purchased an annuity with after-tax dollars (not within an IRA or retirement account).

    Immediate annuity payments are taxed on the interest portion of each payment you receive. The annuity company can tell you what your “exclusion ratio” is and how much of the annuity income you received can be excluded from your taxable income.

    A fixed or variable annuity is set up so when you take withdrawals, you initially receive the part from earnings or investment gain and is considered as taxable income. Eventually, you’ll be withdrawing the value of the original contributions you made, and those payments won’t be included in your taxable income.

    Investment Income

    During retirement, you may still pay taxes on capital gains, interest income, or dividends. The financial institution that holds your investment income accounts sends you the information that you need to report on a 1099 tax form each year. You could qualify for the zero percent capital gains tax rate in that year if your other retirement income sources are not very high. There is a way to minimize your taxes on capital gains and losses if they sit outside of a retirement account. An accountant or financial consultant can advise you how to reduce the taxes on your investment income.

    A bank CD is an investment that is not entirely counted as taxable income. When the CD matures only the interest portion is counted as taxable income and the remaining amount can be used as tax-free income.

    Sale of Your Home (Gains)

    The gains from selling your home may be tax-free if you have lived there a minimum of two years and are less than $250,000 if you are single or $500,000 if you are married. Sale of a home you rented out will have different tax rules on the gains so you may need some tax advice on how to report that on your income tax.

    Your Retirement Tax Rate

    Depending on your total amount of income and deductions you can estimate the tax rate. First, list each type of income, how much will be taxable and then add them up. Then subtract your expected deductions and exemptions.

    Simplifying finances for retirement starts with organization

    How to financially plan for your retirement

    Eric is a duly licensed Independent Insurance Broker licensed in Life, Health, Property, and Casualty insurance. He has worked more than 13 years in both public and private accounting jobs and more than four years licensed as an insurance producer. His background in tax accounting has served as a solid base supporting his current book of business.

    Organizing your finances is the first step to take in planning for retirement. It will make the transition into retirement easier to manage. It is critically important because in retirement you’ll be responsible for your own paycheck. You have to decide how much of your savings to spend each year, and how much needs to remain untouched so it is available in the future. That takes an organized approach.

    List All Retirement Accounts

    A retirement account is anything that is — or was — in an employer-provided plan, such as a 401(k), 403(b), deferred comp plan, SEP, SIMPLE, etc., or any personal retirement accounts such as an IRA. If you have an annuity that is titled as an IRA, include it in this list. If married, list your retirement accounts separately from your spouse’s accounts. If you have a Roth IRA or Designated Roth account through your employer, list those balances separately from your other retirement accounts.

    Now, see which accounts you can combine. For example, all your IRAs can be transferred into one IRA account along with old 401(k) account balances. You cannot combine your retirement account with a spouse’s account, however.

    Track What You Own and Owe in a Net Worth Statement

    In addition to retirement accounts, you may have other savings and investment accounts, stocks, bonds, or mutual funds that are not owned inside of retirement accounts. List these accounts and decide which one, or what amount, you are going to designate as your emergency or reserves account.

    Also list other major assets such as your home, motorhome, gun collection, other collectibles, etc. The idea here is not to list everything you own, but to list things that have value that could be sold or liquidated if you were in a bad financial situation. When you list these items, do not inflate their value — list them at what you think you could sell them for.

    If you have debts, list those too. For example, to the right of your home value, you would list any remaining mortgage balance. Then you would have one more column that subtracted the remaining debt from the asset value so you have the items’ “net worth.” This net worth statement should be updated every year.

    Create an Income Timeline

    When you retire, not all income sources start at the same time. If you make a smart plan, you will intentionally decide when certain items should start, such as Social Security. For example, suppose you are going to retire at 65, but you will not start Social Security until 70. However, your spouse, who is the same age as you, will start collecting a spousal Social Security benefit on your record when they reach age 66. Now you have different income amounts starting in different years. An income timeline lays all this out for you so you can see what amount of your savings you might need to use to fill in the gaps. You’ll want to include projected required minimum distributions from retirement accounts in this timeline. You’ll use this info to estimate income taxes that will be owed in retirement.

    Make a Spending Timeline

    A spending timeline is slightly different than a budget. You’ll need a budget, or list of all your expenses, to complete your spending timeline. What you’ll do is take your expense items and project them into the future. This is important because not all expenses occur every year. For example, many retirees forget to budget for the eventual purchase of a new car. Projecting upcoming expenses for each of the next 10 to 20 years can make sure you don’t overlook things. The most common things that are missed on a retirement budget are Medicare Part B premiums and other health care expenses, new car purchases, major home repairs (such roof replacements or new carpeting), dental care, and the need for additional services such as a handyman, yard care, pool care, or home cleaning services.

    List All Insurance Policies

    Insurance policies need to be reviewed once in a while. Start by listing them all by owner and policy number. Then, once a year, you can refer back to your list to start your review. Categorize your policies by property and casualty (homeowner, auto, etc.), life, health, disability, and long-term care. Then review each category in light of your current goals, and current pricing for that type of policy.

    Work your way through this retirement checklist and you will have a successful retirement.

    Build Up Your Emergency Fund Savings Account

    How to financially plan for your retirement

    Do you have a minimum of three months' worth of living expenses saved in a checking or savings account? Sometimes there are delays in the start date of pensions or Social Security. It is important to have savings you can rely on to cover your bills if you experience delays.

    Make a Retirement Budget

    Have you spent time analyzing your retirement expenses? Working through a before-and-after retirement budget is important. You should come up with an accurate estimate of what you spend now and what will change after retirement. Underestimating expenses is one of the biggest retirement mistakes people can make.

    Determine Your Health Insurance Options

    Have you looked at how you will cover medical expenses and health insurance—and have you included these items in your budget? Health insurance coverage can be expensive if you plan on retiring early. Medicare begins at age 65, but, on average, expect it to cover only about half of your total health care expenses.

    Learn How Retirement Income Is Taxed

    Do you know how your various sources of retirement income will be taxed? Retirees who don't realize that some of their income may need to go toward taxes are in for an unpleasant surprise. When you are planning for your retirement years, be sure that you're preparing for any tax impact.

    Make a Retirement Income Timeline

    Have you made a retirement income timeline to show you when different sources of income will begin? You can line up an income timeline against potential retirement expenses (also laid out in timeline format) to help you manage cash flow.

    Run Scenarios Using Online Retirement Calculators

    Have you tried putting your numbers into an online retirement calculator? This helps you see how long your money will last. You can play around with decisions like retirement date, ​the rate of return, and the rate of inflation, and see how these things may affect your retirement income.

    Use a Social Security Calculator Before You Claim Benefits

    Have you used a Social Security calculator, or worked with a financial adviser who can give advice on your Social Security benefits? Don't begin benefits until you have done an analysis to see when it will be most advantageous to you and your spouse to each begin your Social Security benefits.

    Read up on the Best Retirement Investments

    Have you studied various types of retirement investment options to learn how they can be used to deliver consistent retirement income to you? Each investment choice will have its own pros and cons. It is best to learn how each tool works before you decide which is best for you.

    Make an Investment Plan

    Have you created an investment plan so you have a disciplined approach to follow throughout retirement? An investment plan is like a job description. Once you know the job you need your money to do for you, it becomes easier to make the right hire (i.e., select the most appropriate investments).

    Read at Least One Book on Retirement Planning

    Have you read at least one book on retirement planning? Your money needs to provide for you for a long time. You can't rely completely on other people to give you the best advice. You need to know the basics.

    Interview Potential Retirement Planners

    Have you had a fee-only financial advisor who has expertise in retirement planning review your retirement plan? You can find advisors who will do that for a flat rate, as well as advisors who will manage your retirement investments and help with planning decisions. Getting a second opinion on such a big decision is probably worth it.

    Choose Pension Distributions Only After Analysis

    If you have a pension, do you understand your pension choices and know which one is best for you and your family? Pension decisions can be irrevocable, meaning that you may not be able to change them. These decisions should not be made without analysis.

    Learn How to Take Money out of Your 401(k)

    If you have a 401(k) plan, do you know whether you will leave your money in the plan or roll it over to an IRA account? The right answer may depend on how old you are. If you are over age 59 1/2, consolidating accounts may be your best option.

    See How Work Might Affect Your Social Security Benefits

    If you plan on working in retirement, do you know how your earnings may affect your Social Security benefits if you begin benefits before your full retirement age? If you are under age 66, have started benefits, and make too much, you may have some of your Social Security benefits withheld until you reach full retirement age.

    Learn Medicare Basics

    Do you understand the basics of your Medicare benefits and how much your Medicare Part B premiums may be? Medicare starts at age 65, and Medicare Part B premiums are higher for high-income folks. Best to understand how it all works before you get there.

    Retirement planning doesn’t have to be complicated. The key is to have a written or digital plan that works for you.

    Here are four steps to get you started. For more help with your retirement plan or portfolio, consider working with a financial planner or robo advisor.

    Step 1: Start with your goals.

    Step 1: Start with your goals.

    Your retirement plan should be based on your specific needs and goals. Use the statements below to help clarify the retirement that’s right for you.

    I plan to retire when I’m ________ years old.

    I’ll need about $________ a month for expenses. Use our budget planner to add up your expenses, including needs (like food, housing and healthcare), wants (like travel and entertainment) and wishes (like gifts or a second home).

    Everyone’s situation will be different. But a safe approach is to plan for the same income you have today. Keep in mind that some costs (like work-related expenses and retirement contributions) are likely to decrease after you retire, while others (like health care and travel) may increase.

    I need my retirement money to last about ________ years. Most healthy people should plan for living until they’re 95. If you retire at age 65, this means you’ll need your money to last about 30 years.

    I plan to save $ ________ a month for retirement. Save at least enough to get the full company match , if your employer offers one. Learn how much to save based on your age.

    Step 2: See where you stand.

    Step 2: See where you stand.

    Once you know what you want to achieve, your next step is to determine if you’re on track to reach your goals. Use our retirement savings calculator to find out.

    In addition to your goals and savings, our calculator will take into account other income you might have during retirement, like Social Security, a pension, rental income or an annuity.

    If you’re not on track, we’ll show you specific ways to adjust your plan. You may want to change your retirement age, annual savings or expected retirement expenses to increase your chances of success.

    Step 3: Decide how you’ll save and invest.

    Step 3: Decide how you’ll save and invest.

    Putting your retirement money in the right place is just as important as knowing how much to save. Here’s what we recommend:

    • Save at least enough in your employer-sponsored account—401(k), 403(b), 457(b) or Thrift Savings Plan—to get the full company match, if your employer offers one. If you have more than one 401(k), find out if a rollover is right for you . 1
    • Use a Health Savings Account (HSA) Tooltip An account that lets you set aside tax-free (pre-tax) dollars for qualified medical expenses. Most HSAs also let you invest your savings. To be eligible, you must be enrolled in a high deductible health plan (HDHP). to put money away for future health care costs, if you’re eligible.
    • If you’ve maxed out your employer-sponsored account or don’t have one, consider a traditional 2 or Roth IRA 3 to boost your savings.
    • If you’ve maxed out your IRA, Tooltip Individual retirement accounts (IRAs) are personal retirement savings plans that have tax benefits. Most IRAs offer a choice of investments. Types of IRAs include traditional, Roth, rollover, education, SEP (Simplified Employee Pension Plan) and SIMPLE (Savings Investment Match Plan for Employees). consider a brokerage account Tooltip A taxable account that you open with a brokerage firm. It allows you to invest in stocks, bonds, cash, ETFs, mutual funds and other investments. to save even more.

    Step 4: Check and update your plan, regularly.

    Step 4: Check and update your plan, regularly.

    Over time, your needs, goals and investments are likely to change. Check and update your plan at least once a year to make sure it still makes sense for you. You should also check it after any major life event, like marriage, divorce, a job change or loss of a loved one.

    Regularly rebalancing all the accounts in your portfolio can also help keep your retirement plan on track by keeping your risk level stable, regardless of market ups and down.

    What you can do next

      , including retirement, with our 3-step financial planning guide. with your plan and portfolio from our robo advisor.

    Important Disclosures

    1 A rollover of retirement plan assets to an IRA is not your only option. Carefully consider all of your available options, which may include but not be limited to: keeping your assets in your former employer’s plan; rolling over assets to a new employer’s plan; or taking a cash distribution (taxes and possible withdrawal penalties may apply). Prior to a decision, be sure to understand the benefits and limitations of your available options and consider factors such as differences investment related expenses, plan or account fees, available investment options, distribution options, legal and creditor protections, the availability of loan provisions, tax treatment, and other concerns specific to your individual circumstances.

    2 Withdrawals from a traditional IRA are subject to ordinary income tax. A 10% federal tax penalty may also apply, if you take money out before age 59 1/2.

    3 Earnings from a Roth IRA may be subject to income tax and a 10% federal tax penalty, if you take them out before age 59 1/2. Roth IRA earnings may also be subject to taxes after age 59 1/2, if you have not held the account for at least five years.

    Diversification and rebalancing a portfolio cannot ensure a profit or protect against a loss in any given market environment. Rebalancing may cause investors to incur transaction costs and, when rebalancing a nonretirement account, taxable events may be created that may affect your tax liability.

    Investing involves risk, including loss of principal. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

    The information provided is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends that you consult with a qualified tax advisor, CPA, financial planner or investment manager.

    All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

    How to financially plan for your retirement
    Duke Cunningham CFP®, Regional Team Lead, Development

    Whether you’re planning for retirement or trying to pay off your vehicle, having a solid financial plan in place is the key to reaching your goals.

    The term “financial plan” may seem as if it’s reserved for the wealthy, but the reality is everyone should have one — no matter how much money you have.

    A financial plan is a comprehensive overview of your current financial situation, your future financial goals, and a roadmap for how to achieve those goals. It’s typically something you put together with the help of a financial advisor, and it includes details of your savings, debt, investments, cash flow, insurance, and any other elements of your financial life.

    All those details help paint a picture of where you’re at today, and how you can get to where you want to be in the future. Here’s how you can start:

    Consider Your Goals

    Your financial plan should be guided by both your short-term and long-term goals. Are you thinking about an early retirement? What about having kids and saving for their education? Think about the possibility of buying a house, spending time traveling or even living debt-free.

    All of these considerations can help you live a more intentional life. When you have specific objectives in mind, you can feel more inspired to put in the work to achieve them.

    Take Action

    How to financially plan for your retirement

    Once you have your goals in place, it’s time to start intentionally working toward them. Evaluate your current cash flow and see what needs to be reallocated or adjusted. For example, if you’re spending a large chunk of your monthly income on restaurants each month, perhaps you should consider putting a portion of that income into a savings account instead.

    Some of your goals may be simple and straightforward, like saving enough money to buy a car. But many of us want to work toward larger goals — such as living debt-free and saving for retirement — simultaneously. That’s where the help of a financial planner can be beneficial. They’ll evaluate your financial situation holistically and explain exactly what you can do to reach your goals.

    Build and Emergency Fund

    A fundamental part of any financial plan is setting aside an emergency fund for unexpected repairs or emergencies. You can start small by aiming for $500 in savings, then work your way up to building one month’s worth of living expenses, and then three months’ worth.

    By having an emergency fund, you don’t have to rack up credit card debt or take out a loan. You can recover more quickly, and get back on track to reaching your financial goals.

    Think About Investing

    Investing can be a key component in your financial plan. It can seem daunting at first, but investing can be a relatively simple way to earn additional income. Whether you’re investing in stocks, bonds or commodities, each can yield a different level of risk and return.

    If you’re not sure where to begin, start by putting money into a 401(k). A financial advisor can also help you understand when, how and where to invest your money.

    Review and Revise

    Your financial plan isn’t set in stone. In fact, you should frequently evaluate your plan to make sure it’s still in line with your goals. Major life changes like starting a new job or having kids can affect your finances, and it’s important to take those shifts into consideration.

    It never hurts to sit down with a CERTIFIED FINANCIAL PLANNER™ like the ones at Trust Point to ensure your financial future is sound. They often have sophisticated tools to help you navigate your wealth and can help you develop a step-by-step plan for reaching your goals. Callus and make an appointment at 800-658-9474.

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    How to financially plan for your retirement

    According to a recent Employee Benefit Research Institute (EBRI) Retirement Confidence Survey, many people don’t think that they are doing a good job financially preparing for retirement. EBRI found that only 28% of workers were confident in their retirement planning. Another 28% of people said that they were either not too confident or not confident at all. Working with a financial advisor could help you create a retirement plan for your needs and goals. Let’s take a look at what you can do to prepare for your retirement.

    Make the Decision to Start a Retirement Plan

    The hardest thing about saving for retirement is probably just getting started. Most people don’t have a financial background. So it’s hard to think about things like IRAs or investment portfolios. It is also intimidating to think that you need to save hundreds of thousands of dollars for retirement – especially if you’re just getting started. But saving for retirement isn’t as daunting as it seems. If you start saving early, even small contributions can add up to big savings thanks to compound interest.

    Think About How Much You’ll Need In Retirement

    When you think about saving for retirement, start with how much you currently spend each month. If you spend 10% of your money on clothes, there’s a good chance you’ll want to spend about that much on clothes in the future. Also think about your monthly bills. Many people underestimate how much money they will need to spend in retirement. Some financial experts, like Nicole Lapin tell people that they should expect their retirement expenses to be at least 60% of what they are currently. And that’s assuming you live very frugally. Most people will probably want to spend 70% – 80% of what they currently spend. Look at your spending habits to get an idea what’s important to you.

    Many people have specific things they want to spend money on in retirement. Maybe you want to travel, learn a language or volunteer more. Think about the lifestyle you might want to live. You should also think about where you might want to live. Many retirees move to warm, sunny locales.

    Consider all these current and potential expenses. Once you have an idea how much you’ll spend each month in retirement, you can calculate how much you’ll need in savings.

    Figure out What You Already Have

    How to financially plan for your retirement

    Take stock of all the money and assets that you have saved. If you’re just starting and you don’t have much, that’s fine. But understand what you do have so that you can build off it and make it work for you.

    Sometimes people overlook money that they have saved in a previous employer’s 401(k). If you have money in a 401(k) account that you no longer use, consider an IRA rollover. You can usually transfer the money into your current employer’s 401(k) without having to pay any taxes or fees. You could also open an IRA and transfer the money into that account. Either way, don’t lose progress you’ve already made toward your retirement plan.

    Look over any investments you have and make sure they align with your retirement goals. If you plan to retire in 10 years, you probably don’t want all of your savings invested in high-risk stocks. Though it depends on your plan. Maybe you do have some savings that you want to invest in higher-risk stocks. And if you aren’t sure how to allocate your investments, you should consider getting the help of a financial advisor.

    How to Save Money: Retirement Accounts

    When it comes to a retirement plan, there is no single way that everyone should allocate their savings. Depending on how much you have and what your goals are, you might want to consider different account types or investment vehicles. This is where a financial advisor can really help you. Financial advisors are experts who can help you choose the best investments for your specific situation.

    There are a few ways to save that you should consider. If your employer offers a 401(k), take advantage of it. It will allow you to grow your savings without paying income tax upfront. How much you should contribute to a 401(k) will depend on your situation. Though if your employer offers a 401(k) match, it’s usually a good idea to contribute enough to take full advantage of the match.

    If your employer doesn’t offer a 401(k), you can get many of the same benefits with a traditional IRA. Many experts also advise that people diversify their retirement savings with a Roth IRA. Unlike a traditional IRA, a Roth IRA takes after-tax dollars. The plus is that you don’t have pay income tax when you withdraw the money in retirement. Both types of IRAs can help you to reach your savings goals but you might benefit more from one or the other. For example, people who are just starting their careers might benefit more from contributing to a Roth IRA.

    Common IRA Contribution Limits
    Account Type Annual Contribution Limit*
    401(k) $19,500 ($26,000 if 50 or older)
    403(b) $19,500 ($26,000 if 50 or older)
    SEP-IRA $19,500
    SIMPLE IRA $13,500 ($16,500 if 50 or older)
    457(b) $19,500
    Traditional IRA $5,500 ($6,500 if 50 or older)
    Roth IRA $5,500 ($6,500 if 50 or older)

    *Retirement accounts may also be subject to total contribution limits if you contribute to multiple accounts within a year. Check with the IRS or ask a tax professional if you have questions.

    Consider Risk in Your Retirement Plan

    Many people invest their IRA money through the stock market. There is always risk when you invest in the stock market. One way to potentially minimize that risk is choosing ETFs and index funds instead of just individual stocks. Funds are naturally more diverse and are less likely to lose money if the economy or stock market performs poorly.

    Remember that there are options for people of all risk levels. If you have a low risk tolerance, you might want to consider something like a certificate of deposit (CD). It would earn you more than a savings account and the FDIC insures CDs.

    Bottom Line

    How to financially plan for your retirement

    A retirement plan can help you ensure that you have enough retirement savings to live the life you want to live. If you want to put yourself on the path to retirement success, start saving now. It doesn’t matter how old you are or how much you’ve already saved. There are multiple retirement accounts and the best one(s) for you will depend on your particular situation. You should consult with a financial expert if you need help deciding how to allocate your savings. But no matter what your retirement plan looks like, stick to it! Make saving a priority and don’t let small mistakes or unexpected challenges derail your plan.

    Aniket’s parents are facing some financial difficulties. Aniket is doing his best to help them out. But he doesn’t want to repeat his parents’ mistakes, and he wants to be financially independent even at a very advanced age. His friend Rohit advises him to get himself a well-formulated retirement financial plan. He decides that is a wise idea.

    What is Retirement Financial Planning?

    There will eventually come a time when you will not be able to work anymore. At such a time, it is the planning that you do in your earlier life that helps you become financially independent. You will need enough money even when you cannot work to live comfortably and not put pressure on your children.

    You can meet your goals and live your life the way you want if you have a safety net. You can only maintain this if you have a retirement financial plan. You can only manage your living expenses if you have such a plan in place.

    Why should you start retirement planning?

    • Pensions or Social Security might not be enough – Even with social security benefits, you would still be required to come up with a part of the money needed to live. At more advanced ages it might be difficult to come up with ways to make money. Working could be difficult and at times like these having savings and investments can make all the difference.
    • Not relying on your children – Without having enough savings, you might need to rely on your children for a living. Even if you are very close to your children, this could put unnecessary pressure on your kids. If you can become financially independent it would be better for you and your children.
    • Tax Benefits – There are an endless amount of investment options available, but when it comes to retirement, your main emphasis should be on those that were designed specifically for retirement savings, such as a tax-deferred retirement fund. This can help you with tax benefits as well.
    • Save more money – The more money you can put aside for retirement, the more money you’re saving on taxes. This money can earn a steady increase in investment as well.

    What are the steps in Retirement Financial Planning?

    • Create a long-term plan – Retirement plans are obviously meant to find their fruition much later. This means your plans for the same need to be long-term as well. If you find it difficult to map out your whole life, you can start with a 10-year plan.
    • Understand your circumstances – To make a well-functioning plan you should be aware of what your surroundings and conditions are. Understand your lifestyle and goals, and your sources of income as well. With this, you will be able to figure out how much money you might need after you retire, and where all you can invest and save to achieve this objective
    • Define goals – You cannot formulate a plan without knowing what you want to attain at the end of it. For your financial plan to be effective, it should be accurate as well. This means that if you have specific goals in mind, you should start preparing for them early on
    • Set a realistic retirement age – Don’t stretch yourself out until you cannot work anymore. You should take any health issues you have into consideration and try to set a realistic retirement age. This will also give you an idea of the amount of time you will have to earn money as well.
    • Take emergencies into account – Life is unpredictable, and change is inevitable. You can never know when a calamity might occur or when your health might take a turn for the worse. Make sure that you are insured, and that you have a certain amount of money set aside for emergencies.
    • Get advice from a financial planner – Getting advice from a professional advisor is a great way to make sure you are doing the right things. They can help you with the planning process and remind you of any pitfalls that you might have forgotten to take into account.


    There are many reasons why retirement planning is essential. It is a very important step in your financial process and one that should not be ignored. A bit of work now can result in a very comfortable and happy life for you after you have retired.

    What is the time when you should start thinking about your retirement finances?

    In an ideal world, you should begin saving in your twenties, soon after you first finished school and have started earning money. The reason for this is that there is more chance for your money to grow as soon as you start saving.

    What are some ways to earn money after retirement?

    You can try to boost the advantages that you can get from your social security. If you are physically fit, you can consider getting a part-time job. Another way to get an income would be to rent out a part of your home.