Introduction

Retirement planning is an important financial decision that calls for attention at each stage of life. Proper planning will ensure that you have enough resources to maintain the kind of lifestyle you desire after your active work life. Whether fresh from college, already working, or nearing retirement age, it's necessary to learn the basics of retirement planning. 

In this first part of our guide, we’ll break down who should be involved, the key aspects to consider, and when to begin. These foundational steps will help you take control of your financial future and build a strong retirement plan.

Who Needs Retirement Planning?

Although the primary beneficiary is you, planning for retirement might require a little input from everyone. You should be helping your loved ones with theirs as well, even if you're simply asking what steps they are taking.

If you are married or have a partner, when making a retirement plan, it ought to be a joint effort so that you will both have the same expectations and won't have any surprises later on in life. If you have children or other dependents, involving them in basic discussions about your financial choices helps create transparency and prepares them for their own futures.

What are the Key Aspects of Retirement Planning?

Planning for retirement goes beyond saving money. You’ll need to consider factors like debt management, healthcare costs, and potential surprises along the way.

1. Retirement Savings:

First, project how much you would have to save for a comfortable retirement lifestyle. Consider living costs, trips you might want to take, and future hobbies you might want to pursue. Envisioning what you want your retirement to look like makes it easier to determine how much exactly you'll need to save. You may not know this, but according to CNBC, the benchmark average for retirement savings to have a comfortable life is around $1.7 million. Although this number fluctuates due to some lifestyle and residence choices, it is a good guiding factor.

2. Debt Management:

Try to pay off high-interest debts before you retire. These are usually everything from credit card balances to personal loans and any other kinds of debt that will eat into your retirement savings. You should focus on retiring without little or no financial obligations so that you can enjoy retirement without too many debt payments.

3. Health:

This should be a large part of your retirement planning. While most of it, but not all, will be covered by Medicare, you may want to save money for out-of-pocket expenses, i.e., long-term care and supplemental insurance. In these cases, a health savings account can be a very valuable tool because it's tax-free and flexible. A 2022 report estimated that today, a 65-year-old couple retiring would face an estimated $300,000 to pay for health care only over their retirement years. That high number shows how important it is to plan for it.

4. Surprising Difficulties:

You can never be too prepared for unexpected surprises. That being said, preparing for these eventualities includes putting money aside in an emergency fund for those surprise expenses or inflation, which silently kills savings over time by reducing their purchasing power.

When is the Best Time to Start Retirement Planning?

There's no better time than now.

Even if you are in your 20s and 30s, by giving it an early start, your money has more time to grow with compound interest. Also, the more comfortable you want to be in retirement, the earlier you should start saving.

If you’re in your 40s or 50s, it’s not too late—just time to ramp up your savings and review your goals. As you near retirement, reassess your portfolio, adjust your risk levels, and fine-tune your plan to match your evolving lifestyle goals.

Coming Up Next

Part 2: Where to Save and How to Build a Lasting Plan where we’ll dive into the best retirement accounts, investment options, and the step-by-step approach to building a resilient retirement plan.