Pillar Guide
Complete Retirement Planning Guide
Author: Brett R. Henderson, CIMA®, CPFA®, CRPS®, CEPA®, AIF®, CLU®, BFA™
Last Updated: January 2026
Quick Answer
How do I start planning for retirement?
Start retirement planning by calculating your retirement needs (typically 70-80% of pre-retirement income), maximizing employer 401(k) matches, contributing to tax-advantaged accounts, creating a diversified investment strategy, and reviewing your plan annually. The earlier you start, the more time compound growth has to work in your favor.
What Is Retirement Planning?
Retirement planning is the process of determining retirement income goals and the actions necessary to achieve those goals. According to the Social Security Administration (SSA), Social Security benefits replace only about 40% of pre-retirement income for average earners, making personal savings essential.
How Much Money Do You Need to Retire?
The amount you need depends on your desired lifestyle, healthcare costs, and longevity expectations. Common guidelines include:
- The 80% Rule: Plan to replace 70-80% of your pre-retirement income
- The 25x Rule: Save 25 times your expected annual expenses
- The 4% Rule: An illustrative withdrawal guideline; an appropriate rate and its sustainability depend on assumptions, market conditions, time horizon, taxes, fees, and individual circumstances
When Should I Start Planning for Retirement?
Starting earlier can provide more time for compounding. According to IRS contribution limits for 2026:
401(k) Contribution Limit
$24,500
($32,500 generally if 50+; $35,750 if age 60–63)
IRA Contribution Limit
$7,500
($8,600 if 50+)
What Are the Key Steps in Retirement Planning?
- Calculate your retirement needs based on desired lifestyle
- Maximize employer matches in your 401(k)
- Diversify investments across asset classes
- Optimize Social Security claiming strategy
- Plan for healthcare costs including Medicare
- Create an estate plan to protect your legacy
What Are Common Retirement Planning Mistakes?
- Starting too late and missing compound growth
- Not taking full advantage of employer 401(k) matches
- Underestimating healthcare and long-term care costs
- Claiming Social Security too early
- Being too conservative or aggressive with investments
- Not adjusting your plan as circumstances change
"The biggest retirement planning mistake I see is waiting too long to start. Even small contributions in your 20s and 30s can grow to hundreds of thousands of dollars thanks to compound growth. The second most common mistake is not having a clear withdrawal strategy, accumulating wealth is only half the equation."
Brett R. Henderson, CIMA, CPFA, CRPS
Fiduciary Financial Advisor, SWE90, 20+ years of experience in retirement planning
HYPOTHETICAL ILLUSTRATION. Actual savings needed will vary based on investment returns, inflation, Social Security income, and individual circumstances. Based on Fidelity retirement guidelines; assumes 7% average annual return.
Retirement Savings Milestones by Age
| Age | Savings Target (x Salary) | Example ($100K Salary) | Monthly Savings Needed* |
|---|---|---|---|
| 30 | 1x salary | $100,000 | $500/month from age 22 |
| 40 | 3x salary | $300,000 | $850/month from age 30 |
| 50 | 6x salary | $600,000 | $1,400/month from age 40 |
| 60 | 8x salary | $800,000 | $2,200/month from age 50 |
| 67 | 10x salary | $1,000,000 | Maximize all contributions |
*Assumes 7% average annual return. Based on Fidelity retirement savings guidelines.
Retirement Account Comparison at a Glance
| Feature | Roth IRA | Traditional IRA |
|---|---|---|
| Tax on Contributions | After-tax (no deduction) | Pre-tax (deductible) |
| Tax on Withdrawals | Tax-free | Taxed as income |
| 2026 Limit | $7,500 ($8,600 if 50+) | $7,500 ($8,600 if 50+) |
| RMDs Required? | No | Yes, at age 73 |
| Best For | Expect higher taxes later | Expect lower taxes later |
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Frequently Asked Questions
How much do I need to retire?
Most experts recommend saving enough to replace 70-80% of your pre-retirement income. Use the 25x rule: multiply your expected annual expenses by 25 to estimate your target retirement savings.
When should I start retirement planning?
Starting earlier provides more time for potential compound growth, but beginning later may still help improve retirement preparedness. Outcomes depend on contributions, investment performance, fees, taxes, time horizon, and individual circumstances.
What is the 4% rule?
The 4% rule is an illustrative guideline that begins with a 4% first-year withdrawal and later inflation adjustments. It is not a guarantee of sustainable income. An appropriate withdrawal rate depends on market returns, inflation, taxes, fees, time horizon, other income, and individual circumstances.
Should I prioritize 401(k) or IRA?
A common framework is to first contribute enough to your 401(k) to capture any employer match (subject to vesting), then consider funding a Roth IRA up to the annual limit for potential tax-diversified retirement savings, and then return to your 401(k) to reach the annual contribution limit. The right sequence depends on your tax situation, plan investment options, and overall goals.
How do I plan for healthcare in retirement?
Plan for Medicare at age 65, but also budget for supplemental insurance (Medigap), prescription drug coverage (Part D), and potential long-term care costs. Healthcare can be one of the largest retirement expenses.
Sources & References
Data from the following sources is referenced in this guide. According to these research organizations:
- Source: Fidelity Investments (2024); Average healthcare costs for retired couple: $315,000
- Source: Social Security Administration (SSA) (2024); Benefit calculations and claiming age impact
- Source: Federal Reserve Survey of Consumer Finances (2024); Household retirement savings statistics
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Schedule a no-obligation consultationDisclosure: This content is for educational purposes only and does not constitute personalized financial advice. Please consult with a qualified financial advisor before making any investment decisions.