Planning for retirement is one of the most critical steps in building financial security and achieving peace of mind. With thoughtful preparation, you can look forward to a retirement that meets your lifestyle goals while reducing the stress of financial uncertainty. Whether you’re just getting started or fine-tuning your strategy, 2025 is a great time to take charge of your future. Let’s explore the five key steps to crafting a solid retirement plan.

The earlier you begin saving for retirement, the better your chances of building a substantial nest egg. This is because your investments have more time to grow through compounding returns.

Even if you’re starting later, don’t worry—it’s never too late to plan for retirement. Small contributions today can add up over time, especially if you make strategic investments. If you’re in your 20s or 30s, prioritize starting early. If you’re in your 40s or beyond, focus on catching up by maximizing your savings potential, such as contributing to tax-advantaged accounts like 401(k)s or IRAs.

Understanding your financial needs in retirement is essential. Most experts recommend replacing 70% to 90% of your pre-retirement income to maintain a similar lifestyle. This means if you earn $60,000 annually before retirement, you’ll likely need $42,000 to $54,000 per year after retiring.

Consider your expected expenses, such as housing, healthcare, and leisure activities. Keep in mind that some costs, like commuting or work-related expenses, may decrease, while others, such as medical care, might increase. Use retirement calculators or consult a financial advisor to fine-tune your target savings.

Retirement savings don’t have to come at the expense of other financial priorities. It’s essential to strike a balance between retirement contributions and goals like paying down debt or building an emergency fund.

If your employer offers a 401(k) with matching contributions, prioritize contributing enough to take full advantage of the match—it’s essentially free money. Simultaneously, work on building an emergency fund with three to six months’ worth of living expenses to prepare for unexpected challenges.

Your choice of retirement account can significantly impact your savings. If you have access to a workplace 401(k) with matching contributions, that’s often the best place to start. Contributions are tax-deferred, meaning you lower your taxable income now and pay taxes on withdrawals in retirement.

For those without a workplace plan, Individual Retirement Accounts (IRAs) are a great alternative. A traditional IRA offers tax-deferred growth, while a Roth IRA allows for tax-free withdrawals in retirement. Consider combining accounts to diversify your savings strategy and maximize tax advantages.

Your investment strategy should evolve as you move closer to retirement. Younger investors can afford to take more risks by focusing on stocks, which historically offer higher returns over the long term. As you approach retirement age, shift to a more conservative mix that includes bonds and other lower-risk investments to protect your savings from market volatility.

If managing your investments feels overwhelming, you don’t have to go it alone. Many retirement accounts offer target-date funds that automatically adjust your investment mix as you near retirement. Alternatively, working with a financial advisor can provide personalized guidance tailored to your goals.

Retirement planning isn’t a one-time task—it’s an ongoing process that should adapt as your circumstances change. Life events such as career shifts, market fluctuations, and family changes may require adjustments to your strategy.

Regularly review your progress, assess your goals, and update your plan to reflect your current needs and aspirations.

Whether you’re just beginning or refining your strategy, these five steps will help you build a retirement plan that works for you. Remember, the earlier you start and the more intentional you are with your savings, the better prepared you’ll be to enjoy a financially secure and fulfilling retirement.

If you’re ready to take the next step, connect with one of our financial advisors to create a plan tailored to your unique needs and goals. Let’s work together to make your vision for retirement a reality!

Article Source:

Orem, T., & Sham, J. (2025, February 21). 5 Steps to Retirement Planning in 2025: An introduction and how-to guide. NerdWallet.