Build a Retirement Plan Around the Life You Want
Retirement planning is about more than saving a certain amount. It means understanding how much you may need, where your retirement income could come from, how your savings are invested, and how your decisions today can shape your financial options later.
Turn today's financial decisions into tomorrow's options.
What retirement planning really involves
A useful retirement plan starts with a simple question: what do you want your financial life to look like when employment income is no longer your primary source of money?
From there, the planning process becomes more practical. You can estimate future spending, review the savings you already have, consider how much you can contribute, and think about the income sources that may be available later in life.
Your retirement resources may include workplace retirement plans, IRAs, taxable investments, cash savings, pensions and Social Security. The mix will be different for every household, which is why a retirement plan should be built around your own income, expenses, timeline and priorities.
How much might you need for retirement?
There is no single retirement savings number that works for everyone. The amount you need depends on factors such as when you expect to stop working, how much you spend, whether you expect housing costs to change, healthcare expenses, taxes, other income sources and how long your retirement lasts.
Instead of starting with a generic target, begin with your expected lifestyle. Think about essential expenses first, then consider travel, hobbies, family support, charitable giving and other goals that may matter to you.
Inflation also matters because the cost of goods and services can change over a long retirement horizon. A retirement plan therefore works better as an ongoing process than as a one-time calculation.
Understand your 401(k) before focusing on everything else
For many employees, a workplace 401(k) is one of the main retirement savings tools available. Employees can generally contribute part of their compensation to the account, while an employer may also contribute depending on the plan.
The details of your specific plan matter. Review the contribution rules, available investments, fees, employer contribution structure and vesting provisions. If your employer offers matching contributions, understand the rules that determine when and how those contributions are made.
Traditional and designated Roth contributions can also have different tax treatment. Traditional contributions generally receive tax treatment before retirement that differs from Roth contributions, which are made with after-tax dollars and can receive different treatment when qualified distributions are taken.
Know what your employer retirement plan actually offers.
Traditional IRA vs. Roth IRA
Individual retirement accounts can provide another way to save for retirement outside or alongside a workplace plan. Traditional and Roth IRAs are both designed for retirement saving, but their tax treatment is different.
Contributions to a traditional IRA may be deductible depending on your circumstances, including income and whether you or your spouse participates in a workplace retirement plan. Roth IRA contributions are generally not deductible, but qualified Roth distributions can receive tax-free treatment under applicable rules.
The better choice is not automatically the account with the more attractive-sounding tax feature. Your income, tax situation, eligibility, expected future tax position and retirement strategy all matter.
Social Security can be part of your retirement income plan
Social Security retirement benefits can become an important part of retirement income, but they should be considered alongside your savings and other resources rather than viewed as the entire plan.
Eligible workers can generally begin retirement benefits as early as age 62. The age at which you claim benefits affects the monthly benefit amount, so the timing decision deserves careful consideration.
The Social Security Administration provides personalized benefit information through its online tools. Reviewing your own earnings record and estimated benefits can give you a more useful starting point than relying on a generic retirement estimate.
Review when benefits can begin
Consider how your claiming decision fits with your broader income plan.
Compare different claiming scenarios
Think about your expected expenses, other income and how long savings may need to last.
Coordinate benefits with your savings
Social Security is one piece of a larger retirement-income strategy.
Your retirement investments need a plan too
Saving money for retirement and investing retirement savings are related but different decisions. The amount you contribute determines how much capital you put to work, while your investment choices determine how that money is allocated across assets.
Your investment approach should reflect your time horizon, financial goals, risk tolerance and ability to withstand market declines. Someone with decades before retirement may have a different allocation from someone who expects to start drawing from their portfolio soon.
Diversification can help spread exposure across different investments, but it cannot eliminate investment losses. Retirement planning therefore involves balancing the need for long-term growth with the need to manage the risks associated with market volatility.
Estimate where your retirement income may come from.
Separate essential costs from lifestyle spending.
Account for healthcare and insurance costs in your planning.
Consider how different retirement accounts and withdrawals may be taxed.
Plan for the possibility that retirement may last for decades.
Saving for retirement is only half of the conversation
A retirement portfolio eventually needs to support real-life spending. That means retirement planning should consider not only how much you accumulate but also how you might turn those assets into sustainable income.
Your income plan could involve a combination of Social Security, retirement-account withdrawals, taxable investments, cash reserves, pension income or other resources.
Withdrawal decisions can also have tax consequences. Traditional retirement accounts generally have different withdrawal rules from Roth accounts, and required minimum distribution rules can apply to many retirement accounts later in life.
Estimate how your retirement savings could grow
Enter your own numbers to create an educational estimate of your potential retirement balance. The calculator starts completely blank so you can use your actual situation.
Build your estimate
This is an educational projection, not a guarantee of investment performance.
Enter your current age, target retirement age, savings and contribution amount.
Investment returns are uncertain. Actual results will vary based on contributions, market performance, fees, taxes and other factors.
Latest investing and money insights
Understand the key pieces of a retirement plan before making long-term financial decisions.
Common retirement planning questions
The earlier you start, the more time you have to save and potentially benefit from investment growth. However, retirement planning is useful at any stage because your priorities, income and retirement timeline can change over time.
There is no universal amount. A useful estimate depends on your expected retirement spending, retirement age, current savings, contributions, other income sources, taxes, healthcare costs and investment assumptions.
A 401(k) is an employer-sponsored retirement plan, while an IRA is an individual retirement arrangement. They have different contribution rules, tax treatment and eligibility requirements.
Traditional and Roth IRAs generally receive different tax treatment. Traditional IRA contributions may be deductible depending on your circumstances, while Roth IRA contributions are generally made with after-tax money and qualified distributions can receive tax-free treatment.
Eligible people can generally begin Social Security retirement benefits at age 62. The age at which you claim benefits affects the amount you receive, so the decision should be considered alongside your overall retirement-income plan.
It depends on your circumstances, including your workplace plan, employer contributions, tax situation, investment choices and eligibility. Reviewing the specific features of both accounts can help you decide how they fit together.
Inflation can reduce the purchasing power of money over time. Because retirement can last for many years, your planning should consider how future expenses may differ from today's costs.
Required minimum distributions, or RMDs, are generally minimum amounts that must be withdrawn annually from certain retirement accounts once applicable rules require them. The rules differ by account type and situation.
Your retirement plan should evolve as your life changes.
Start with your current numbers, understand your available retirement accounts and regularly revisit your savings, investments and expected income needs.