Creating a Retirement Plan: Ideas to Help Get You Started
Retirement planning requires more than just saving: You need to define a clear path to take. Here are some pointers.
You probably wouldn’t drive to an unfamiliar destination without a map or GPS. So why are you heading toward retirement — a pretty significant journey — without a plan?
Granted, you’ll get there with or without guidance. But you’re much more likely to arrive happy and prepared if you spend some time writing out your goals and how you’re going to pursue them.
Here are some ideas to get started:
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Step 1: Develop an income plan.
When you stop working, your paychecks stop as well. It’s critical that you know where your money will come from in retirement.
Create a budget now so you’ll have an idea of how much you’ll need every month. Then add up all your protected income sources: Social Security, pensions, annuity payments. Is there a gap? If so, create a plan to help fill it. Don’t forget to factor in your spouse and anyone else you’ll want to take care of when you die as part of your planning.
Step 2: Calculate your risk tolerance.
If your portfolio were to drop 30% in the next year, how would that affect your ability to pursue your retirement goals? A lot depends on how close you are to calling it quits. Do some serious soul-searching to determine how much money you should have in growth-based financial vehicles, which carry more risk, and how much you should have in fixed financial vehicles.
Step 3: Don’t forget the “HIT” List: health care, inflation and taxes.
An often-overlooked area of retirement planning is inflation. In 1990, the cost of a first-class postage stamp was 25 cents; today it has almost doubled to 49 cents. If you need $5,000 a month to meet your current spending needs, how much will you need 10 or 20 years from now? Taxes and health care costs are also likely to rise. Don’t underestimate the future costs of these basics.
Step: 4: Decide who should manage your finances.
Whether to manage your own money or hire a financial professional is a big decision.
If you choose to do it yourself, make sure you do your homework and continue to stay up to date on all the options available to help preserve and grow your money. Keep your emotions out of it. And don’t rely too heavily on friends or relatives for advice. Your best moves will probably come from research — not the guy at the barbecue.
If you decide to hire a financial professional, consider working with a fiduciary. By law, a fiduciary must have your best interests in mind when making recommendations.
Make sure your financial professional has the heart of a teacher and is willing to spend the time necessary to help ensure you understand the recommendations he or she is making. Look for someone who is experienced and focused on retirement and income planning. And be sure you connect on a personal level. This person will be responsible for creating a strategy to help protect and grow your assets, so you don’t want to dread your interactions.
Even with a solid retirement plan, you’re bound to hit some bumps in the road. But it can help you be better prepared to deal with those problems and keep moving toward a better future.
Kim Franke-Folstad contributed to this article.
-
Hiding the Truth From Your Financial Adviser Can Cost YouHiding assets or debt from a financial adviser damages the relationship as well as your finances. If you're not being fully transparent, it's time to ask why.
-
How to Manage a Disagreement With Your Financial AdviserKnowing how to deal with a disagreement can improve both your finances and your relationship with your planner.
-
5 Actions to Set Up Your Business With Your Exit in MindWhen you're starting a business, it may seem counterintuitive to begin with exit planning. But preparing will put you on a more secure footing in the long run.
-
Are You Honest With Your Financial Adviser? Why Hiding the Truth Can Cost You
Hiding assets or debt from a financial adviser damages the relationship as well as your finances. If you're not being fully transparent, it's time to ask why.
-
5 Actions to Set Up Your Business With Your Exit in Mind, From a Wealth Adviser
When you're starting a business, it may seem counterintuitive to begin with exit planning. But preparing will put you on a more secure footing in the long run.
-
Missed Your RMD? 4 Ways to Avoid Doing That Again (and Skip the IRS Penalties), From a Financial PlannerIf you miss your RMDs, you could face a hefty fine. Here are four ways to stay on top of your payments — and on the right side of the IRS.
-
What Really Happens in the First 30 Days After Someone Dies (and Where Families Get Stuck)The administrative requirements following a death move quickly. This is how to ensure your loved ones won't be plunged into chaos during a time of distress.
-
AI-Powered Investing in 2026: How Algorithms Will Shape Your PortfolioAI is becoming a standard investing tool, as it helps cut through the noise, personalize portfolios and manage risk. That said, human oversight remains essential. Here's how it all works.
-
A Newly Retired Couple With a Portfolio Full of Winners Faced a $50,000 Tax Bill: This Is the Strategy That Helped Save ThemLarge unrealized capital gains can create a serious tax headache for retirees with a successful portfolio. A tax-aware long-short strategy can help.
-
5 Retirement Myths to Leave Behind (and How to Start Planning for the Reality)Separating facts from fiction is an important first step toward building a retirement plan that's grounded in reality and not based on incorrect assumptions.
-
I'm a Financial Adviser: Silence Is Golden, But It Hurts Your Heirs More Than You ThinkTalking to heirs about transferring wealth can be overwhelming, but avoiding it now can lead to conflict later. Here's how to start sharing your plans.
