Retirement planning can feel overwhelming, with countless "what ifs" clouding the process. Am I saving enough? Am I already behind? What happens if something unexpected pops up?
The good news is retirement planning doesn’t have to be complicated. A bit of clarity and a simple, step-by-step plan can put you back in control. There’s no one-size-fits-all savings number. The right amount depends entirely on your life, your goals, and the kind of future you want to build.
This article will help you cut through the confusion with practical strategies so you can map out your financial path with confidence. Whether you're just starting your career, midway through, or playing catch-up after a few detours, you can chart a course toward a secure, confident retirement.
What really goes into your “dream retirement,” and why does it matter?
Retirement is about more than leaving the workforce; it is about how you want to spend your days. Your first step is not crunching numbers; it is envisioning the life you want to live.
Why start here?
Your goals form the foundation for every decision that follows. Do you see yourself traveling, volunteering, learning something new, or spending more time with family? Maybe you envision a cozy cottage or a home near the water. Every detail shapes what you will need to save.
When do you want to retire?
Retiring earlier means you will need your savings to last longer. Staying in the workforce a few more years gives you more time to save and reduces how much you will need to withdraw.
Picture your lifestyle:
- Will you spend more or less than you do now?
- Will you own your home outright, or will you be renting?
- Are there significant expenses—such as travel or supporting family—you want to plan for?
Quick estimate:
Many people plan to replace about 70% to 80% of their pre-retirement income. While this is a common benchmark, your plan should reflect your personal vision for retirement.
How do you figure out where you stand, right now?
It is difficult to chart a course if you do not know your starting point. Taking an honest inventory of where you are today is the first step toward building a strong retirement plan.
Put everything on the table:
- Check your 401(k), 403(b), or any employer-based retirement accounts.
- List any IRAs (Traditional or Roth).
- Include investment or brokerage accounts.
- Track down old retirement accounts from past employers.
Review other income sources:
- Social Security.
- Pensions or annuities.
- Rental income, freelance work, or side jobs.
Find the gaps:
Match your current savings and contributions against what you will likely need. If you are unsure where you stand, you are not alone. Most people are uncertain at first. The important step is establishing a starting point.
A little homework:
Review and update your household budget. Identify realistic ways to boost your savings and find areas where you can reduce spending without sacrificing your lifestyle.
How much will you actually need to retire comfortably and stay comfortable?
For most people, the hardest question is simple: How much is enough to retire and stay comfortable?
Rough in your retirement budget:
- List regular expenses: housing, groceries, utilities.
- Add healthcare costs, which tend to rise over time.
- Factor in occasional or unexpected spending: home repairs, new vehicles, travel, or gifts.
Estimate how many years you might spend in retirement. Today, 20, 25, or even 30+ years is common. And inflation matters, what buys $50,000 of comfort today will likely cost much more down the road.
Subtract your other income:
Once you have a rough annual spending estimate, subtract what you expect to receive from Social Security, pensions, or other reliable income sources. The difference is what you’ll need to cover from your savings.
The 4% rule, a helpful, but imperfect guide:
A traditional guideline suggests you can withdraw about 4% of your retirement savings per year. Following this rule, a $1 million portfolio could provide around $40,000 annually in addition to other income sources.
Keep in mind: this is a starting point, not a guarantee. Market returns, inflation, and your spending habits may require adjustments over time.
What’s the best way to start (or turbocharge) your retirement savings, even if you’re feeling behind?
If you’re feeling behind, you’re not alone. Many people get a late start or encounter financial setbacks along the way. The good news: small, consistent contributions can add up significantly over time, thanks to the power of compound growth.
Starting early has outsized rewards:
- Begin saving at 25: $200 a month over 40 years at 6% growth could grow to more than $400,000.
- Start at 45: the same contributions and growth would build to about $90,000.
Playing catch-up can make a big difference:
If you’re 50 or older, the IRS allows additional "catch-up" contributions to retirement accounts each year. Even if you're younger, increasing your savings when you get a raise, tax refund, or bonus can accelerate your progress.
Small steps, taken consistently, can make a significant impact on your future retirement security.
Where should you be putting your money?
Start with what’s free:
If your employer offers a 401(k) match, make sure you contribute enough to receive the full match. It’s one of the easiest ways to boost your savings.
Think beyond the basics:
Explore Traditional and Roth IRAs. Both offer tax advantages, but with different rules. A Roth IRA, for example, allows your investments to grow and be withdrawn tax-free in retirement.
Diversify your investments:
Spread your investments across different asset classes: stocks, bonds, cash, and possibly real estate. Diversification helps balance potential growth with protection against risk.
Adjust as you get closer to retirement:
Gradually shift toward more conservative investments, like bonds and cash, as you approach your retirement date. Reducing risk over time can help protect the savings you’ve built.
Revisit and rebalance regularly:
Review your investment portfolio at least once a year. Rebalancing helps keep your allocation aligned with your goals and risk tolerance. Set it and forget it doesn’t work forever.
How do inflation and living longer change the retirement math?
It’s easy to underestimate these two major retirement challenges. Inflation quietly raises the cost of everyday goods and services year after year, eroding the purchasing power of your savings over time. At the same time, people are living longer, healthier lives, which means your retirement funds may need to last 20, 30, or even more years.
Ignoring these realities can leave a serious gap in your planning. Factoring them in now helps ensure your savings not only get you to retirement but also sustain the lifestyle you want throughout it.
The rising cost of living:
What costs $100 at the grocery store today might cost $200, or more, in a couple of decades. Inflation steadily erodes purchasing power, meaning your retirement savings must grow enough to keep pace.
Longer retirements mean more years to fund:
It’s smart to plan for a 30-year retirement. Running out of money is far scarier than having a bit left over. Err on the side of caution. Planning for a longer retirement isn’t pessimistic. It’s a practical way to ensure financial security well into the future.
Is it worth bringing in a professional or can you tackle this on your own?
A good advisor does more than pick investments. They help you clarify your goals, weigh your options, avoid common mistakes, plan how and when to withdraw your money, and adjust your strategy when life throws you a curveball.
Times when professional advice makes sense:
- You own a business, have complex investments, or significant assets
- You are within 10 years of retirement
- You want more peace of mind about your plan
Questions to ask a potential advisor:
- "How do you get paid?"
- "Are you a fiduciary, meaning are you required to put my interests first?"
- "How often will we review and adjust my plan?"
The bottom line
True confidence in retirement planning does not come from luck or guessing. It is built through preparation, honest assessment, and consistent action.
Wherever you are in your journey, whether just starting, midway, or feeling behind, it is never too early or too late to take the next step.
What can you do today?
- Set aside an hour to review your retirement goals and current savings.
- Take one small action, like increasing your contribution, rebalancing your investments, or reaching out for guidance.
- Keep moving forward. Consistency matters much more than getting everything perfect from the start.
Retirement planning is a journey made up of small, steady steps. Confidence grows each time you make progress.
Need help mapping out your retirement plan?
Schedule a free call with DiMercurio Advisors. We will help you clarify your goals, fine-tune your strategy, and move forward with confidence.
