Retirement Planning: A Complete Roadmap
Whether you're just starting out or counting down the years, here's what to do at every stage of your retirement journey.
Retirement planning isn't a one-time event — it's a series of decisions made over 40+ years. The rules, priorities, and tradeoffs change dramatically depending on your age, income, and how close you are to retirement. This guide breaks it down decade by decade.
The most important concept in retirement planning is compound growth. A dollar invested at 25 grows to $21 by 65 at a 7.5% average return. The same dollar invested at 45 grows to only $4.25. Time is the most valuable asset you have — and you can't buy more of it.
Start Here: Know Your Numbers
Before diving into strategy by decade, use these two calculators to understand where you stand and where you need to be.
Your Decade-by-Decade Roadmap
In Your 20s: Build the Habit
Your most valuable retirement asset in your 20s isn't money — it's time. Even small contributions made now will dwarf larger contributions made later.
Priority 1: Contribute at least enough to your employer's 401(k) to get the full match. This is a 50–100% instant return on your money. There is no better guaranteed investment.
Priority 2: Open a Roth IRA and contribute up to the annual limit ($7,000 in 2024). In your 20s, your income is likely lower, so you'll pay tax now at a lower rate and let the money grow tax-free for decades.
Target: Save 10–15% of gross income for retirement. If that's not possible yet, start at 5% and increase 1% per year.
In Your 30s: Accelerate
Your income is rising. Big life events are happening — marriage, kids, home purchase. It's easy to let "lifestyle creep" consume salary increases that should go to retirement.
Target: Have 1x your annual salary saved by 30, 3x by 40 (Fidelity's benchmark). Don't panic if you're behind — increase contributions now.
401(k) vs. Roth IRA: If you got a raise into a higher tax bracket, reconsider the Roth vs. traditional split. Sometimes pre-tax traditional contributions make more sense at higher incomes.
Don't neglect HSA: If you have a high-deductible health plan, an HSA is the best retirement account nobody talks about. Contributions are pre-tax, growth is tax-free, and qualified medical withdrawals are tax-free. Triple tax advantage.
In Your 40s: Maximize and Diversify
Your 40s are typically your peak earning years. Maximize every tax-advantaged account available to you.
Target: 6x salary by 50. Max your 401(k) ($23,000/year in 2024) and IRA ($7,000). If you have a side income, consider a SEP-IRA or Solo 401(k).
Shift focus to allocation: In your 20s and 30s, almost any diversified stock portfolio is fine. In your 40s, start thinking about your target allocation as retirement approaches. Most people gradually shift toward more bonds and stable assets.
Know your FIRE number: Even if early retirement isn't the goal, knowing your "financial independence number" is motivating and clarifying.
In Your 50s: Catch Up and Plan
The IRS lets you make catch-up contributions starting at 50: an extra $7,500/year in your 401(k) (total $30,500) and an extra $1,000 in your IRA (total $8,000) for 2024.
Social Security planning: At 62 you can start claiming, but every year you wait increases your benefit by ~8%. Waiting from 62 to 70 can increase your monthly benefit by 76%. Run the numbers for your situation.
Sequence of returns risk: A major market crash early in retirement can permanently impair your portfolio. In your late 50s, start building a 2–3 year cash/bond buffer so you don't have to sell stocks in a downturn.
In Your 60s: The Transition
You're in the home stretch. Key decisions: when to retire, when to claim Social Security, when to start drawing from which accounts (taxable first? Roth last?).
RMDs: Required Minimum Distributions from traditional 401(k)s and IRAs start at age 73. These are taxable income — plan for them. Converting some traditional funds to Roth in your early 60s (before Social Security and RMDs kick in) can reduce your future tax burden.
Healthcare bridge: If you retire before 65 (Medicare eligibility), you'll need to cover health insurance. ACA marketplace plans can work, but budget for them — they're substantial.
The 4% rule: A common guideline is to withdraw no more than 4% of your portfolio in year one, then adjust for inflation. On a $1,000,000 portfolio, that's $40,000/year. Run your own numbers.