How to prepare for retirement

Published on

Whether you’re just starting your career or are planning to retire this year, it’s never too soon or too late to start preparing for your retirement. What this entails may be different from person to person, but there are a few essential tips everyone should keep in mind when saving up for their eventual retirement.

Start early

Saving for retirement isn’t something that most of us can do overnight. It takes time to build up the necessary funds, so it’s best to start saving sooner rather than later. While you don’t necessarily have to start saving in your twenties, you should seriously start investing into your retirement funds in your thirties and forties. This will give you time to add to and subsequently grow your 401(k), IRA, Roth IRA, or other high-yield savings accounts. With that being said, it’s also never too late to start saving for retirement. You might just have to be more aggressive with your savings to build up a fund that can prepare you for your next steps into retirement.

Save, save, save

While there’s no one right number for how much you’ll need to save for retirement, it’s generally estimated that retirees need between 70 and 90 percent of their preretirement annual income, which will be a combination of savings and social security. To help you reach this goal, you’ll want to save around 15 percent of your gross annual income every year. There’s always some flexibility to this number, but there’s also no such thing as saving too much. If you work for a business that offers a 401(k) company match, try meeting at least the minimum requirements of that match. This is additional money that you’ll be able to use when it does come time to retire. If you’re company doesn’t offer this benefit or if you’re self-employed, you can always open your own 401(k) or IRA retirement account that you can add to every month.

Know what to expect from retirement

It may not be easy to picture, but it can help in your quest to save for retirement if you have an idea of the kind of lifestyle you’ll want to live when you hit retirement age. Are you going to be moving states, traveling, or taking a part-time job? You’ll also have the expenses associated with the cost of living, such as housing, food, and healthcare, as well as taxes on Social Security and withdrawals from your retirement accounts. All this can impact the amount you’ll spend each month while in retirement, thus impacting the amount you’ll need to save before retiring. Even if you don’t yet know what retirement will look like for you, keep it in the back of your mind so you can adjust your savings and investments the closer you get to retirement age.

Account for inflation

No matter what general suggestions you follow, it’s always a good idea to save more than you think you may need. The cost of living tends to increase by at least 2 percent each year, though that can vary greatly depending on the state of the economy. By saving more, you’ll help to protect your future self and ensure your financial security so you can enjoy all that comes with retirement.

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

This article was prepared by ReminderMedia.

LPL Tracking #1-05351612

You may also like


What do you really know about bear markets?

The Coronavirus Bear kicked the 11-year bull off of Wall Street very fast

A “bear market” occurs when stock prices in general are falling, and then widespread pessimism sustains the continued drop in prices. The stock market becomes a bear…


Five Strategies for Tax-Efficient Investing

As just about every investor knows, it's not what your investments earn, but what they earn after taxes that counts. After factoring in federal income and capital gains taxes, the alternative minimum tax, and any applicable state and local taxes, your…


Retirement expectations vs. reality

You can’t always envision what will happen in your “second act.”

Just as few weathercasters can accurately forecast a month’s worth of temperatures and storms, many retirees find their futures unfolding differently than they assumed. Your…

General Disclosures

The opinions and views in this blog post are those of the authors, and are not intended to provide specific advice or recommendations for any individual. Please consult professional advisors with regard to your individual situation.


Securities and insurance offered through LPL or its affiliates are:

Not Insured by FDIC or Any Other Government Agency

Not Bank Guaranteed

Not Bank Deposits or Obligations

May Lose Value

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Webster Bank and Webster Investments are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Webster Investments, and may also be employees of Webster Bank. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Webster Bank or Webster Investments.

The LPL Financial registered representatives associated with this website may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.

Your Bank (“Financial Institution”) provides referrals to financial professionals of LPL Financial LLC (“LPL”) pursuant to an agreement that allows LPL to pay the Financial Institution for these referrals. This creates an incentive for the Financial Institution to make these referrals, resulting in a conflict of interest. The Financial Institution is not a current client of LPL for brokerage or advisory services. Please visit for more detailed information.

The Webster Symbol is a registered trademark in the U.S.