December 11, 2023 | Allison Robertson

Planning Ahead for Retirement

Planning Ahead for Retirement

Married People factsShutterstock

Retirement is the season in life when things start to quiet down, and the daily grind lessens, replaced by more time for relaxation, travel, and family.

But to really enjoy these golden years, careful planning is key.

Here’s an in depth guide to retirement and why timely planning is important.

What is Retirement?

Nicest Thing Ever Done FactsShutterstock

Retirement is the period in life when a person chooses to leave their regular employment—usually their primary income. This typically happens around a certain age, which is approximately 50+.

This phase in life is often associated with aging but can happen whenever someone has the means to no longer work for a living.

Why is Retirement Planning So Important?

senior couple with suitcase in airportA Lot Of People, Shutterstock

Retirement planning is important because it allows you to maintain a certain standard of living after your working years.

According to a report by the U.S. Bureau of Labor Statistics, on average, Americans spend 20 years in retirement.

Planning ensures you have enough money to cover your living expenses, healthcare, travel, and any other recreational activities during these years.

When Should I Start Saving for Retirement?

Happy young couple are hugging and laughing outside.J carter ,Pexels

The earlier you start saving, the better.

Starting already in your twenties will allow you to take full advantage of compound interest—which can significantly grow your savings.

For example, if you start saving $200 a month at age 25, with an average return of 7%, you’d have about $525,000 by age 65.

If you were to start just five years later, at age 30, you would have $100,000 less by the age of 65.

How Do I Plan for Retirement?

Three people having a meeting at office, talking and looking at laptops.Darlene Alderson, Pexels

Set Retirement Goals: Visualize what retirement looks like for you.

Start Early & Contribute Regularly: Compound interest works best over longer durations.

Expand Your Investments: Consider a mix of stocks, bonds, and other investments.

Use Retirement Accounts: Make use of tax-sheltered accounts like 401(k)s or IRAs.

Monitor & Adjust: Regularly review your plan and tweak when necessary.

How Much Will I Need to Save for Retirement?

Person in flannel shirt having a meeting with unhappy boss, sitting on a table speaking about bad performanceTero Vesalainen, Shutterstock

A common suggestion is to aim to replace 70-90% of your pre-retirement income. However, it’s important to consider individual circumstances.

To estimate an accurate number:

  • Estimate yearly retirement expenses
  • Subtract any guaranteed sources of retirement income (ie. Social Security or Pensions)
  • Ure a retirement calculator to adjust for inflation and market returns

What Happens if You Don’t Save for Retirement?

Cases Of Instant KarmaShutterstock

The biggest problem will be financial hardship. Without savings, retirees will then have to rely on limited sources of income, like Social Security, that are not always available, or enough.

Without enough savings, and limited income coming in, retirees will have to reduce living expenses (ie. Downsize housing), and run the risk of not being able to afford all necessary healthcare.

What is the Biggest Mistake People Make While Planning for Retirement?

Never Argue With An IdiotFreepik,

One of the biggest mistakes people make while planning for retirement is underestimating living expenses in retirement—this includes healthcare.

According to a study by HealthView Services, a 65-year-old couple retiring now will need approximately $295,000 just for healthcare expenses throughout their years of retirement.

What is the Biggest Expense for Retirees?

Medical OMG EncountersShutterstock

Given the average age of retirees, healthcare is the biggest expense. As we get older, the need for medical services and medications usually increases.

Housing is the second biggest expense for retirees. Even though the absence of a mortgage can lesson some costs, ongoing expenses like property tax, maintenance, insurance, and utilities can still make housing a huge cost concern.

Final Thoughts

Not In Medical SchoolShutterstock

Planning for retirement may seem intimidating, but if you do it right—and early—it’s a goal within reach.

Remember, you don’t want to just survive in retirement, you want to thrive in retirement.



Conflicted People Reveal Their Most Dark And Disturbing Family Secret

Here lie real accounts of the moments people who thought they were "normal", discovered that their personal family secret is darker than expected.
July 12, 2018 Eul Basa

Divorce Lawyers Share The Most Ridiculous Reason A Client Has Filed For A Divorce

A divorce is most often always a painful event. Here, divorce lawyers share the strangest reasons someone has come to their office and asked for a divorce.
August 10, 2018 Eul Basa

Ex-College Students Share Their Crazy Expulsion Stories

Between partying and struggling to make pass, there are many chances for you to meet trouble in your college years. Rarely, though, people face expulsion.
August 11, 2018 Eul Basa

Therapists Share The Exact Moment They Realized They Were Treating A Sociopath

The sociopath condition isn't diagnosed as much as movies make us to think. That doesn't mean there aren't real-life sociopaths out there seeking analysis.
August 16, 2018 Eul Basa

Wise People Share What You Should Know About Marriage Before Proposing

Proposing to your significant other is one of the biggest commitments that you can make in your life. Let these veterans tell you why.
September 7, 2018 Eul Basa

Teachers Share The Most Hilarious Answers People Have Filled Out On A Test

When students are uncertain the answers to questions, they often just give it their best guess or leave it blank. Some kids are a little more creative.
August 13, 2018 Eul Basa

Dear reader,

It’s true what they say: money makes the world go round. In order to succeed in this life, you need to have a good grasp of key financial concepts. That’s where Moneymade comes in. Our mission is to provide you with the best financial advice and information to help you navigate this ever-changing world. Sometimes, generating wealth just requires common sense. Don’t max out your credit card if you can’t afford the interest payments. Don’t overspend on Christmas shopping. When ordering gifts on Amazon, make sure you factor in taxes and shipping costs. If you need a new car, consider a model that’s easy to repair instead of an expensive BMW or Mercedes. Sometimes you dream vacation to Hawaii or the Bahamas just isn’t in the budget, but there may be more affordable all-inclusive hotels if you know where to look.

Looking for a new home? Make sure you get a mortgage rate that works for you. That means understanding the difference between fixed and variable interest rates. Whether you’re looking to learn how to make money, save money, or invest your money, our well-researched and insightful content will set you on the path to financial success. Passionate about mortgage rates, real estate, investing, saving, or anything money-related? Looking to learn how to generate wealth? Improve your life today with Moneymade. If you have any feedback for the MoneyMade team, please reach out to [email protected]. Thanks for your help!

Warmest regards,

The Moneymade team