​Retirement is one of life’s constants. Setting aside enough savings in your working years will ensure you have adequate income to live off in retirement. 

So, how do you start saving for retirement? The first step is meeting with a retirement planning professional. This is a financial advisor who has the knowledge and competence necessary to create a retirement plan for you. They also help you execute the plan. 

A retirement planning professional will initially want to know details about you. These include your age, monthly income, monthly expenses, assets, and liabilities. This information will help them understand your current financial position. 

Next, they will inquire about your future retirement goals. You may fancy an active retirement where you travel the world and engage in your hobbies regularly or prefer a quiet, relaxed retirement. Perhaps you just want to maintain your current standard of living in retirement. Each case will require different retirement income levels. 

Given your age, financial position, and retirement goals, the advisor will recommend an amount to save up so as to live comfortably in your golden years. The advisor will also factor in expenses you may not be cognizant of, like medical expenses in old age. If you only withdraw the recommended percentage from this amount annually, say 4 percent, you will have enough to meet your needs. 

Once you have a dollar amount to work toward, the advisor will recommend an amount of money to save every month toward your retirement goals. This will align with your monthly cash flow needs. If your expenses are too high, the advisor will even recommend ways to budget better so that you can save for retirement. 

Choosing an appropriate retirement investment vehicle is the next step. Americans have several tax-advantaged retirement investment channels to choose from. The major ones are individual retirement accounts (IRAs) and 401(k)s. 

There are two types of IRAs: traditional IRAs and Roth IRAs. Contributions to traditional IRAs are tax deductible, and once money is invested, it grows tax-deferred. A person can withdraw the money after the age of 59.5 years. Withdrawals are taxed as ordinary income. Early withdrawals can trigger penalties. 

Contributions to Roth IRAs are not tax deductible. Once invested, the money grows tax-free. A person can withdraw from age 59.5 years tax-free. 

There are contribution limits for both types of IRAs. A retirement planner will guide you on these, as well as withdrawal rules and minimum distributions. 

The other popular retirement vehicle, 401(k), is available to people who obtain their income from an employer. Once you enroll in a 401(k), contributions are automatically deducted from your monthly income. Some employers even match monthly contributions. There are traditional 401(k)s where contributions are deductible and Roth 401(ks) where contributions are not tax deductible. A retirement planner will guide you on the advantages and disadvantages of each and select the one best suited for you. 

Once you have calculated your ideal retirement amount, determined the required monthly contributions to reach it, and identified suitable investment vehicles to save in, you’re ready to go. Execute the plan religiously. 

Depending on your age, you may have to save more or less for retirement. Younger people typically have lower monthly contribution requirements as they have many years to grow their savings, while older people have higher contribution requirements. People with higher incomes also tend to save more. 

Stick to the plan your retirement planner has created for you. Your advisor may even recommend you prioritize certain investment vehicles like employer-matched 401(k) plans. Max out contributions to these before shifting to the secondary vehicle. This will place you in the best position to retire comfortably. 

Finally, routinely go through your retirement plan with your advisor to track your progress. In case your financial circumstances or future goals change, your advisor will adjust your retirement plan accordingly.

​Investment diversification ensures you are not overly reliant on a single asset. By spreading investments across various industries, asset classes, and geographic regions, you reduce the overall risk of your portfolio. Diversifying your retirement portfolio helps you withstand market fluctuations and secure a stable financial future. A well-diversified retirement portfolio offers growth and risk management opportunities. When planning your retirement, a financial advisor will consider factors like your age, goals, and risk tolerance to select appropriate asset classes for diversification.

A fundamental feature of a diversified investment portfolio is that it involves a mix of different asset classes like stocks, mutual funds, exchange-traded funds (ETFs), real estate, and bonds. Acquiring a mix of asset classes is important because they all perform differently based on the market conditions and realities. For example, stocks offer growth potential, while bonds provide income stability. ETFs and mutual funds help spread investments across various industries, reducing the risk of individual asset failures.

Alternative investments are also instrumental in diversifying retirement savings. Stocks and bonds typically come with their own risk. However, investment options like commodities, private equity, and real estate investment trusts (REI) can serve as a hedge to protect the investor from market volatility and inflation. Because these investment options are not usually affected as much by the volatilities in the traditional market, they are instrumental to securing the overall investment portfolio.

Further, diversifying your retirement savings might require you to consider tax-advantaged accounts. When you spread your investments across retirement accounts like Roth IRAs, traditional IRAs, and $01(K)s, you can take advantage of tax benefits. For instance, a Roth IRA account allows you to make tax-free withdrawals when you retire. Similarly, a traditional IRA account guarantees tax-deferred growth on your investment. A combination of these accounts ensures flexible withdrawals and tax efficiency.

Also, you can consider investing in international funds and stocks because they ensure exposure to different economies, which can help to improve returns and reduce the risks that might arise from investing in a single economy. Opening retirement accounts like 401ks and IRAs gives you the opportunity to invest globally.

While long-term investments are essential for a secure retirement, having accessible cash is just as important. So, keep a reserve in a high-yield savings account or money market fund, as this provides financial flexibility in case of emergencies. This safety net will also help you avoid selling investments at a loss during market downturns.

Markets are constantly shifting, and certain investments may grow faster than others, gradually changing the balance of a retirement portfolio. Without regular monitoring, a once well-diversified portfolio might become too risky or too conservative, depending on market performance. So, you should periodically review your investments and make necessary adjustments to ensure they still align with your long-term goals and risk tolerance.

A good rule of thumb is to rebalance your portfolio at least once a year. This process involves selling assets that have grown disproportionately and reinvesting in areas that may have lagged, bringing your portfolio back in line with your original plan. By doing so, you can maintain a stable and well-diversified investment strategy that supports financial security throughout your retirement years.

​Self-employed individuals don’t have the luxury of employer retirement contributions, so they must take proactive steps to secure their financial future. Without a structured retirement plan, many face financial insecurity in retirement. Therefore, selecting the right savings plan is one of the first steps in ensuring financial security after work.

There are a number of retirement savings options that self-employed people can choose from. These plans have their respective advantages and disadvantages, so it depends on the individual to select which one works best for them. Some of the most common personal retirement savings options are the simplified employee pension (SEP) IRA, the savings incentive match plan for employees (SIMPLE IRA), solo 401(K) plan, taxable investment accounts, and traditional or Roth IRA.

A SEP IRA is a tax-deferred plan that allows self-employed individuals to contribute up to 25 percent of their net income. It must not exceed $66,000 every year. This retirement savings option is such that there are no mandatory contributions, and it allows the individual to make adjustments to their contributions based on changes in their income. Contributions to a SEP IRA are tax-deductible and reduce taxable income.

The SIMPLE IRA requires contributions not above the sum of $15,500 annually or $19,000 for individuals above the age of 50, making it suitable for self-employed individuals or small businesses. Although SIMPLE IRA contributions are lower compared to Solo 401k(K) and SEP IRA, it is quite easy to set up and administer. Contributions reduce taxable income, and the funds grow tax-deferred.

A Solo 401(K)is a retirement plan that caters to the needs of self-employed individuals or owners of small businesses that have no employees except a spouse. This plan comes with a high contribution limit, which ensures that both the employer and employee are able to make contributions. In 2025, the 401(K) contribution limit has been increased to $23,500 for individuals from $23,000, and it has been increased to $31,000 for people above the age of 50 from $30,500. Making contributions to the solo 401(K) plan helps the individual to reduce taxable income.

Although it is not a dedicated retirement plan, taxable investment accounts offer self-employed individuals a flexible way to grow their wealth. These accounts allow investments in stocks, bonds, and mutual funds without contribution limits, making them a valuable option for those looking to supplement their retirement savings. One of their biggest advantages is flexibility. They do not come with penalties for early withdrawals, giving investors access to funds when needed. They also serve as a great diversification tool, working alongside traditional retirement accounts to create a well-rounded investment portfolio. However, it’s important to consider tax implications, as investment gains are subject to capital gains tax.

The Traditional IRA allows tax-deductible contributions, reducing taxable income in the present, but withdrawals are taxed during retirement. In contrast, the Roth IRA requires after-tax contributions but offers tax-free withdrawals in retirement, making it a strong long-term tax strategy. Both IRAs have contribution limits of $6,500 per year ($7,500 for individuals over 50). Roth IRA eligibility depends on income, while tax deductions for Traditional IRAs may also be income-limited. The best choice depends on your financial goals, tax situation, and need for future flexibility.

​Retirement marks an important transition that leads to substantial shifts in one’s financial life. Earnings from different channels, like retirement funds, Social Security, and diverse investments, replace previous salaries. The ideal retirement income varies by region, but some may require up to $1 million. Americans save an average of $300,000 by 54 and $500,000 by 64. Effectively handling various sources of revenue during retirement is essential for sustaining one's desired standard of living and ability to pay post-retirement bills, including healthcare.

The primary concern in handling finances during retirement revolves around ensuring that retirees avoid exhausting them before the end of their lives. Therefore, retirees should ensure they have sufficient earnings to prevent the necessity of returning to work in the future or resorting to drastic measures to fulfill their essential requirements. Thorough strategizing is necessary, even with a significant sum saved for retirement, including contributing to retirement accounts.

Approximating all expenses and formulating a financial budget is also an excellent way to manage retirement funds. Retirees must recognize that how they spend money will shift throughout retirement, which could span several decades. While certain expenditures such as transportation, job-related expenses, and mortgage obligations might decrease or halt, expenses such as health care and recreational pursuits may see a rise. When devising a retirement financial plan, consider the amount of income necessary to substitute and whether expenditures will rise or fall.

Next, explore ways to reduce taxes. Implementing strategies to minimize tax liability is consistently wise from a financial standpoint. For instance, married couples received a personal allowance of $12,570 for the tax year 2021/22. Therefore, collectively, they could earn over $25,000 annually without incurring income taxes.

In addition, consider inflation. Recent indications have made it clear that inflation might make an unwelcome return, posing significant concerns for individuals in retirement. Retirees can implement measures to shield themselves against the repercussions of inflation during retirement, like regularly reviewing their investment portfolios and diversifying their investments.

Then, manage earnings and growth. In retirement planning, it is crucial to find an equilibrium between the revenue and expansion aspects of investment portfolios. The objective is to establish a varied blend of investments that corresponds to financial objectives and comfort level with risk through asset allocation. Asset allocation refers to the strategically arranged combination of stocks, bonds, and cash in an investment portfolio. Investing money into stocks usually presents the opportunity for increased gains in the future, albeit accompanied by higher levels of fluctuation and risk.

Lastly, retirees can manage their retirement funds by using the right accounts for their withdrawals. Maximizing the benefits of your tax-advantaged retirement accounts is crucial. The longer retirees allow for growth without facing taxes on the profits, the more advantageous their position will become. Retirement experts suggest starting withdrawals from taxable accounts initially, then moving on to tax-deferred accounts, thereby enabling the growth of these specific accounts.

Individuals who want more guidance and personalized financial assessments can speak with finance professionals specializing in retirement planning. Then, individuals can make informed decisions about their future.

Transitioning into retirement sometimes leads to worries about maintaining your standard of living and concerns about fraud and financial exploitation. The strategies to protect your income and assets should be implemented long before you retire. Common ones involve Social Security, employer-sponsored plans, long-term care insurance, and annuities.

Reports indicate that 70 percent of people claim Social Security before age 64, receiving what is referred to as reduced benefits. The full benefit eligibility age in the United States is 66 years and two months for people born in 1955. The eligibility age is 67 for those born in 1960 or later. However, you can claim benefits as early as 62, though you will be penalized. If you wait until 70, you get 76 percent more benefits than opting out earlier. It offers a feasible way to access extra Social Security funds, boosting your retirement funds.

Purchasing an annuity ensures a steady and guaranteed stream of income. An annuity is an agreement or contract with an insurance company in which you pay a lump sum or premiums, and the insurance company pays you the invested funds, with interest, as a fixed income stream at a future date. The premiums are paid after retirement for as long as you live, providing a steady and assured retirement income.

The annuity also has allocations to protect assets, though the extent of the protection depends on state law. Some protect the cash surrender value, the amount you receive when you cancel the annuity before it matures. Others protect any returns from the annuity from garnishment.

Garnishment refers to a court order in which a third party, such as an employer or bank, is ordered to direct money owed to you to your creditors. Other forms of protection of assets extend only to the amount necessary for your support.

One common situation that erodes retirement savings is unexpected costs from age-related health conditions that require long-term care and sustained treatment. Medicare or other health insurance policies rarely cover long-term care. Long-term care insurance helps alleviate these financial strains.

First, you can self-insure by setting aside and investing money to handle unexpected expenses, including health, after retirement. However, self-insurance comes with the risk of underperforming investments or health conditions costing more than savings. Second, you can purchase a long-term care insurance policy. This option often ensures access to treatment and offers payment as a lump sum or in installments.

One of the risks your retirement income faces is inflation. It significantly erodes the savings and the value of assets by reducing the purchasing power of money. Consider the future value of your retirement plan, and integrate compensation measures. Social security has a cost of living adjustment benefit that adjusts the value of the benefits according to inflation.

You can further protect yourself by opting for an inflation-protected annuity (IPA), which assures you of a return above or at the inflation rate at the time of annuity maturity. Though IPAs provide a slightly lower return than other annuities, you are at least assured your retirement income is protected from inflation.

You can also protect your retirement income by choosing investments that adjust with inflation. The common types include growth-oriented investments like treasury inflation-protected securities(TIPS). These are government-issued securities designed to protect investors from the adverse effects of inflation. Also, consider dividend-paying stocks and commodities like gold, which grow in value with time.