Get Financially Prepared to Retire: Here’s How

See Important Information Below

If you’re an investor and saver with retirement on the horizon, you know better than most that preserving and growing your income is the key to making your money last. Even with a plan in place, it’s wise to be vigilant about your saving, since people are living longer than ever before. About 25% of those who are at least 65 already will live past age 90, according to the Social Security Administration1. Many unknowns – including a potentially long retirement – can contribute to a growing concern over finances, which includes the cost of healthcare and changes in the economy. To help you get started, we put together a few ways to plan for retirement through investing, saving and sticking to your desired plan.

What is Retirement Financial Planning?

Retirement financial planning involves analyzing and identifying your current assets to achieve your retirement goals. Whether you’re retiring in the next five years or 25 years, retirement planning is important to your financial success once you leave the working world. During this process, you will look at your sources of income, estimated expenses, investments and then implement the proper savings program to help you achieve financial success.

How Does Retirement Financial Planning Help?

Employee Benefit Research Institute2 conducted a study revealing that only six out of every 10 workers are saving for retirement—while the rest are doing nothing. Many Americans say they will live off of Social Security, but the Social Security Administration3 states that it’s only designed to replace 40% of your overall income. To make matters even more frightening, social security is projected to completely disappear by 2034.

Knowing these statistics, the question becomes: how does retirement financial planning not help? Life can throw unpredictable expenses your way—including medical bills paid out of pocket, car repairs, home improvement and more. Planning for your retirement can provide extra income to tap into for the rest of your life.

How To Save for Retirement

If you’re wondering how to save for retirement, you have options. There are many routes to financial self-sufficiency, and determining the best one for you is a unique decision. No matter what stage of life you’re in, now is a perfect time to do a retirement plan check-up, and consider new savings and investment tactics available for building and maintaining your retirement nest egg.

How To Plan & Save For Retirement

Keep in mind that preparing for retirement starts long before your actual retirement date—and the sooner you can start saving, the better. So, you may be asking yourself am I financially ready for retirement? If not, now is the time to start.

The amount you want to retire on also varies from person to person. Some statistics claim that you should have $1 million saved to live comfortably. Some sources suggest saving 8-10% of your pretax income. Regardless of your goals, there are numerous studies, articles and retirement calculators that can provide great starting points. Other factors to consider when preparing for retirement are your health or life expectancy, current spending versus saving levels, and your lifestyle preference after retirement.

Once you decided your desired amount, you’ll want to break down your assets and start a budget:

  • Identify all cash flows and income
  • Calculate how much debt you have
  • Determine how much you have to save after life necessities

You also want to prepare for those unexpected life moments we mentioned earlier. Once you’ve mapped out your goals and budget, make sure you stick to them.

Start Saving

We can’t say it enough: the earlier the better to start saving for retirement, but it is also never too late. Simple actions like contributing to your company’s 401(k), setting aside a fixed percentage of your income and just living within your means are great steps to future financial success.


Save between 8-10% of your paycheck for retirement. You should also take advantage of your employer match, no matter the percentage. This also gives you control over your investment plans and how much you want to contribute.


A Pension requires you to make contributions into a pool of funds for your future benefit. Unlike a 401(k), you have no control over your investments and it is money guaranteed for life

Traditional IRA

Traditional IRAs can be used in addition to your 401(k), and they provide upfront tax deduction benefits—which makes it attractive for those trying to lower their tax bill. In turn, this could reduce your overall tax rate in retirement. The contribution limit for 2019 is $6,000 or $7,000.

Roth RA

The Roth IRA is the alternative strategy. It has no tax reduction when you contribute, but your withdrawals can be made tax-free in retirement. These accounts have specific eligible rules and have higher limits than traditional IRAs.

Pay Off Debts Before Retirement

It’s estimated that 25 percent of people expect to die with debt. While many people expect to pay off their debts, 60% of people don’t have an expected date. Unfortunately, many people still have debt in retirement due to unforeseen reasons—including job loss or health issues. If possible, you should always focus on paying your debt off quickly and consistently to make sure you can focus on your retirement.

What Are The Safest Retirement Investments?

Diversifying your types of investment and savings vehicles is one of the smartest actions you can take, according to Investopedia4. Pouring all retirement funds into one investment type disproportionately impacts your money when you need it most if the market factors are unfavorable at that time. Those who were heavily invested in stocks at other banks during 1987, 2001, or 2008-2009, for example, keenly remember the bottom dropping out of the market5 and personal wealth falling along with it. However, those who avoided the stock market on its subsequent rebound missed incredible growth opportunities, according to reports.

Consider Certificates of deposit

Putting your money in a certificate of deposit (CD) restricts access to the funds until the fixed maturity date, but maintains a guaranteed interest rate for the duration, according to Investopedia2. Plus, money in these investment vehicles backed by the FDIC6 up to $250,000 per person listed on the account (Actual amount may vary. Visit for more information).

Is a Money Market Account a Good Option?

If you’re holding cash in a bank account and may need it for something in the near future, it’s a good idea to keep it liquid and accessible (instead of restricted like a CD). Bankrate7 says that one option to consider is putting the funds in a money market account. While the minimum balance requirement may be higher than a regular account, as NerdWallet8 puts it, the interest rate may be higher, and your money will be available to you if you need it.

Diversity With Bonds

Whether you choose a bond mutual fund or individual bonds, both can provide a predictable income stream from interest (unless they are called), while also preserving your capital investment, MarketWatch9 indicates. Many investors like to purchase bonds partly because bonds can help mitigate stock losses, and also because bonds are an easy way to diversify equity risk in a portfolio.  Bonds of course are subject to risks just as are stocks.  The value of a bond typically falls as interest rates rise.  Some bonds are subject to “call,” meaning you have to return them and receive their market value which may be higher or lower than at time of purchase.

Catch up With an Annuity

An annuity may be able to provide a measure of guaranteed, steady income starting at a date you choose when purchasing this insurance product, according to Investopedia9. The money grows tax-deferred, and there’s no limit to how much you can contribute to an annuity for retirement10. This can be especially helpful for those who feel they’re behind on retirement savings. There are fixed annuities and variable annuities. Certain annuities or types of annuities may be more appropriate for investors depending on their individual circumstances.

Find Growth With Mutual Funds or ETFs

Stocks have the potential to grow your wealth, as long as you choose the right ones at the right time. Rather than investing in individual securities, though, U.S News11 points out that you may want to grow your assets using mutual funds or exchange traded funds (ETF) focusing on stocks. Plus, the fees are usually lower than buying and selling specific stocks, and you can diversify based on sector and risk profile.  On the other hand, some investors have the time and expertise and prefer holding individual stocks, which may pay dividends.  Make sure you read the prospectus carefully for any mutual fund you are interested in prior to purchase.  The prospectus contains the investment objectives, risks, and charges and expenses associated with it.

Set Yourself up For Success

No matter how you choose to grow your retirement savings, don’t forget to consider any fees charged for managing and purchasing your investments, which can eat into your growth. For example, mutual funds and ETFs have fees included in their net asset values, and financial institutions may charge a commission to buy or sell mutual funds and ETFs. Managed accounts typically charge an annual fee based on the assets in the account.  Annuities involve charges such as mortality and expense fees and investment fees and expenses, and may have surrender charges as well as commissions or concessions for purchase or sale.  On the other hand, look for quality options available with lower fees, which can also provide returns for retirement income.
Making smart investment and banking decisions now can help give you an advantage in your retirement years. Be sure to speak to a financial expert to learn more about which investment options make the best sense for you.


1. Social Security Administration

2. Employee Benefit Research Institute

3. Social Security Administration - Retirement

4. Investopedia

5. The Balance



8. NerdWallet

9. MarketWatch

10. Investopedia- Annuity

11. U.S News

This article was helpful.