Retirement planning is one of the most important financial priorities you can have and one of the most commonly delayed. Whether you’re just starting out in your career, navigating your peak earning years, or approaching retirement itself, it’s never too late to make meaningful progress.
The stakes are real. Nearly 2 in 5 Americans cite not having enough saved for retirement as a top financial concern, and 64% say they worry more about running out of money than dying. Understanding the basics is the first step toward closing that gap.
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What Is Retirement Planning?
Retirement planning is the process of setting financial goals for the years after you stop working and building a strategy to reach them. It involves taking stock of your assets, liabilities, income sources, expected expenses, and tax situation and creating a plan that reflects the retirement lifestyle you want.
A strong retirement plan anticipates potential risks such as healthcare costs, inflation, longevity, and market volatility and builds strategies to manage them. The goal is to give you income you can’t outlive and flexibility to adapt as life changes.
Key Retirement Planning Terms to Know
Retirement planning comes with its own vocabulary. Here are some of the most important terms:
- Traditional IRA and 401(k): Tax-deferred accounts funded with pre-tax dollars. Contributions may reduce your taxable income today, and taxes are paid when funds are withdrawn in retirement. Per the IRS, the 2026 contribution limit for IRAs is $7,500, and $24,500 for 401(k)s.
- Roth IRA and Roth 401(k): Funded with after-tax dollars. Contributions don’t reduce your taxable income today, but qualified withdrawals in retirement, including earnings, are tax-free. These can be a valuable tool depending on your current and expected future tax situation.
- Catch-up contributions: Additional contributions allowed for savers age 50 and older. In 2026, those 50 and over can contribute an additional $8,000 to a 401(k) and an additional $1,100 to an IRA. Under the SECURE 2.0 Act, savers ages 60–63 qualify for a higher “super catch-up” of $11,250 to employer-sponsored plans.
- Social Security benefits: Monthly payments based on your earnings history and the age at which you claim. The full retirement age for most people today is 67. Delaying your claim past full retirement age, up to age 70, increases your monthly benefit.
- Pension plans: Employer-sponsored defined benefit plans that provide a guaranteed monthly income in retirement, typically based on years of service and salary history. Less common in the private sector today, but still prevalent in government and some union employment.
- Annuities: Contracts with an insurance company that provide a stream of income payments, either for a fixed period or for life. They come in several forms, fixed, variable, and indexed, with different risk profiles and features.
Common Questions About Retirement Planning
How much should I be saving for retirement?
A commonly cited benchmark is to save at least 15% of your income each year for retirement, including any employer matching contributions. Fidelity recommends this target, and it aligns with guidance from many financial professionals. That said, the right savings rate depends on when you started, what you’ve already saved, your expected retirement age, and your lifestyle goals. Starting earlier allows compound growth to do more of the work; starting later may require a higher contribution rate to close the gap.
What investments should I consider for retirement?
The right investment mix depends on your age, risk tolerance, time horizon, and goals. Younger savers with decades until retirement can generally afford more exposure to growth-oriented investments like stocks, as there is time to recover from market downturns. As retirement approaches, many investors gradually shift toward a more conservative allocation to protect accumulated savings.
Target date funds, which automatically adjust their asset allocation as you approach a designated retirement year, have become increasingly popular and now account for a large portion of 401(k) assets. A financial professional can help you evaluate whether a target date fund, a custom portfolio, or a combination approach makes sense for your situation.
How much do I need to live comfortably in retirement?
A traditional guideline suggests planning for 70–80% of your pre-retirement income, though this varies based on your lifestyle, location, healthcare needs, and whether you carry debt into retirement. Americans currently estimate they need an average of $1.46 million to retire comfortably, though actual needs vary widely. Healthcare is one of the largest and most unpredictable variables. The average 65-year-old can expect to spend a lot on medical costs over the course of retirement, making it a critical line item in any retirement income plan.
When should I start planning for retirement?
The earlier you start, the more time compound growth has to work in your favor. But starting later is always better than not starting at all. If you’re closer to retirement and feel behind, catch-up contribution provisions, Social Security timing strategies, and careful budgeting can all help close the gap. A qualified financial professional can help you assess where you stand and what steps are most impactful given your timeline.
Taking the Next Step
Retirement planning is an ongoing process that evolves as your life, income, goals, and the financial landscape change. Understanding the basics like what accounts are available, how much to save, and how to invest is the foundation.
Discover your Retirement Readiness score by taking our persona quiz, located on our Retirement Planning page. Then book an appointment with a qualified financial professional that can help you build a plan tailored to your specific situation and give you confidence that your retirement is on track.
