10 Steps To Help You Prepare for Retirement

Core Insights - The article emphasizes the importance of retirement planning and the various options available for individuals to save for retirement, including IRAs, 401(k) plans, and pension plans [1][2][4][5]. Group 1: Retirement Accounts - Individuals without access to a 401(k) or pension should consider investing in an IRA, which offers tax benefits and allows for a maximum contribution of $7,000 per year in 2025 [1]. - Employees can contribute up to $23,500 to their 401(k) plans in 2025, and employer-sponsored plans provide tax advantages and potential matching contributions [2]. - Business owners with no employees can open one-participant 401(k)s, and high-yield savings accounts can also be dedicated to retirement savings [3]. Group 2: Retirement Planning Steps - Retirement planning should begin early, with individuals encouraged to create a vision for their retirement lifestyle and savings plan [4][5]. - Setting retirement goals, including a target retirement age and estimating necessary income, is crucial for effective planning [9]. - The U.S. Department of Labor recommends having 70% to 90% of pre-retirement income to maintain living standards, translating to $42,000 to $54,000 annually for someone earning $60,000 [9]. Group 3: Social Security and Professional Guidance - The average Social Security benefit in 2025 is projected to be about $2,008 per month, which may not cover average living costs [10]. - Individuals can start claiming Social Security benefits at age 62, but delaying can increase monthly payments [11][12]. - Hiring a financial advisor can help individuals develop a tailored investment strategy and retirement plan [15]. Group 4: Financial Management Before Retirement - The last five years before retirement are critical for ensuring a smooth transition, with actions taken during this period having lasting impacts [16]. - Maximizing retirement accounts, managing debt, and establishing an emergency fund are essential steps to prepare for retirement [20].