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8 ESSENTIAL STEPS WHEN PREPARING FOR RETIREMENT

A guide for planning the retirement of your dreams.

Article published: March 01, 2024

Whether it’s two or 20 years away, it’s never too early or too late to startpreparing for retirement. While envisioning your life in retirement can be exciting, planning for it can be overwhelming. Butthe small steps you take now can have a big impact on your future.

As you plan, it’s important to consider some key retirement realities:

Your savings need to last

As of 2022, the average life expectancy in the U.S. is 77.5 years. While like expectancy briefly dipped during the COVID-19 pandemic, it has since rebounded and with the rapid rate of scientific advancement, it may continue to increase.

Taxes can have an impact

If you have money in traditional pre-tax IRAs and 401(k)s,withdrawals in retirementare typically taxed at ordinary income rates.

Your expenses may change in retirement

You may not have to spend money on work attire and commuting costs, but hobbies, travel, health care and new living accommodations might change your expenses. Also, don’t forget tofactor in inflation– because all these activities and amenities may cost more in the future. Look at all your expenses toget your spending in retirement just right.

8 ways to start preparing for retirement

1. DREAM BIG, BUT BE REALISTIC

Will you work part time in retirement? Travel? Volunteer? Take a comprehensive look at your financial resources to determine if they’ll support your plan.

Here are a few questions to explore:

  • How much have I saved in retirement accounts and other savings accounts?
  • How much will I receive in pension or Social Security benefits?
  • Will I work in retirement?
  • Will I receive an inheritance?
  • Do I want toleave a significant amount to my heirs?
  • What is my own and my family’s medical history?
  • Do I want to leave a legacy?
  • Will I need to financially support family members in the future (aging parents, children, etc.)?


Don’t think your resources will be enough to reach your retirement goals? Determine what you’ll need and consider how you can make your resources work for you, such as exploring ways to save more or looking for other growth opportunities. Alternatively, adjust the view of what your retirement will look like to match your current resources.

2. DRIVE DOWN DEBT

Now’s the time to pay off credit cards and other high-interest, nondeductible debt. Reducing existing debt and limiting new debt accumulation can minimize the amount of retirement income that would be spent on interest payments.

3. BUILD A CASH RESERVE

Set aside enough funds to cover at least three to 12 months of your salary in case there is a reduction to your current income.

4. CONTRIBUTE TO YOUR WORKPLACE RETIREMENT PLAN

Don’t miss out on free money. Try toincrease the contributions to your workplace retirement plan or 401kto qualify for any matching contribution that your employer might offer. If you can’t, contribute as much as you can now and gradually increase the amount over time – for example, 1% every year. You can also consider increasing contributions by 50% of any future raises or bonuses.

5. TAKE ADVANTAGE OF CATCH-UP CONTRIBUTIONS AND CONSIDER CONSOLIDATING

If you’re 50 years or older, you can contribute additional money to your 401k. You can also consider combining your retirement accounts to potentially simplify your investment strategy and get a clearer view of your total retirement assets.

6. PLAN WHERE YOU’LL LIVE

In retirement,whereyou live can significantly impacthowyou live. For instance, if you move to a smaller development in a state with lower taxes, your expenses could decrease – freeing some income to pay for other priorities such as medical care. Alternatively, you might choose to move closer to your family in a state with a higher cost of living and higher taxes. Factor your location into your retirement budget.

7. INVEST THE MONEY YOU’RE SAVING

Investingis key to helping meet your goals, but avoid the temptation to take on more risk than you're truly comfortable with in an effort to play catch-up. The higher potential returns you seek, the greater your risk will be.

Let’s look at some important investment tips:

  • DON’T:Buy the fund that had the best return last year. Past performance is no indication of future results.
  • DON’T:Buy when the market is soaring and sell after the market drops.
  • DON’T: Invest in a fixed account to “play it safe.” Although fixed accounts offer low risk, they also offer low returns– which may not get you where you want to go.
  • DO: Maintain a long-term focus.
  • DO: Diversify across asset classes.
  • DO: Save consistently and consider using dollar-cost averaging.
  • DO: Usestrategic rebalancingto maintain your proper allocation.

8. GET THE HELP FROM AN ADVISOR

You don’t have to go it alone. An ѨƵ advisor can work with you to create a personalized financial plan and help you achieve your retirement goals.

We can help you prepare for retirement by:

  • Taking a holistic view of your overall financial situation
  • Assisting with complex tasks, such as:
  • Asset allocation
  • Providing education onEstate planning issues
  • Guidance on tax planning strategies
  • Keeping up-to-date with developments in financial services and products
  • Helping you get and stay on track

Don’t leave your future to chance. Put your strategic plan in place to help work toward the retirement of your dreams.

Dollar Cost Averaging does not assure a profit or protect against a loss in a declining market. For the strategy to be effective, you must continue to purchase shares in both up and down markets. As such, an investor needs to consider his/her financial ability to continuously invest through periods of low price levels.

Investing strategies, such as asset allocation, diversification or rebalancing, do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. All investments have inherent risks, including loss of principal. There are no guarantees that a portfolio employing these or any other strategy will outperform a portfolio that does not engage in such strategies.

Past performance does not guarantee future results.

Neither ѨƵ nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from your qualified tax and/or legal professionals to help determine the best options for your particular circumstances.


Carissa Caramanis

Lead Writer, Digital Content and Education Center

With more than 30 years of experience in content and communications, Carissa is the lead writer for the ѨƵ digital content team.

Carissa joined ѨƵ in 2022 to lead content development for the Education Center and to support digital content growth. She took her first paid newswriting job at the age of 16 and has been writing ever since, having ...