Preparing for Retirement: A Step-by-Step Guide
Find practical milestones, tax-smart savings strategies and clear guidance to help you prepare for retirement — wherever you are today.
Retirement planning can feel like a lot. Breaking it into four life stages can make it easier to know what to do next:
- Start early by automating your savings, getting the full employer 401(k) match and opening an IRA.
- Check in mid-career to see how your savings compare with your goals and adjust your investments as needed.
- Use the five- to 10-year countdown to make catch-up contributions and reduce the impact of market swings.
- Prepare for the transition by planning when to claim Social Security, how to make tax-smart withdrawals and how to cover health care costs.
Getting started and building momentum
Where you are in life: You may be early in your career, balancing rent or a first mortgage, paying down student loans and trying to make room for retirement savings.
What’s on your mind: “Am I already behind? How can I save for something 30 years away when I have bills to pay today?”
What to focus on now:
- Set up small, automatic contributions so saving happens without another item on your to-do list.
- Contribute enough to your workplace retirement plan to receive the full employer match, if one is available. It’s part of your compensation and can give your savings an immediate boost.
- Learn how tax-advantaged accounts, such as Roth and Traditional IRAs, can help your money grow over time.
Why time can matter more than your starting amount
Starting early can matter more than starting big because your earnings can generate earnings over time.
Even small monthly contributions may outgrow larger amounts started later.
See how time, contributions and retirement accounts work together:
Choosing between a Traditional and Roth IRA
Beyond a workplace plan, an Individual Retirement Account (IRA) can offer tax advantages.
Traditional IRA: Contributions may be deductible; withdrawals are generally taxed.
Roth IRA: Contributions are after-tax; qualified withdrawals are tax-free.
Compare IRA tax rules and features to find the right fit:
Your mid-career check-in
Where you are in life: You may be in your peak earning years, often in your 40s or early 50s, while balancing family expenses, college costs and your own retirement goals.
What’s on your mind: “Did other priorities get in the way of saving? Am I on track, or is it time to make a few changes?”
What to focus on now:
- Complete a straightforward, judgment-free retirement checkup to estimate how your current savings may translate into monthly income.
- Pay down high-interest debt so more of your income can support future goals.
- Review your investments to make sure the mix fits your goals, timeline and comfort with risk.
How to tell if you’re on track
One common rule of thumb compares your total retirement savings with your current gross annual salary1:
- By Age 30: 1x your annual salary saved
- By Age 40: 3x your annual salary saved
- By Age 50: 6x your annual salary saved
- By Age 60: 8x your annual salary saved
- By Age 67: 10x your annual salary saved
If your savings are below these benchmarks, don’t panic. Your 40s and 50s are often your highest-earning years and can be a good time to increase contributions, review your investments and pay down costly debt.
Add your age, income and account balances to estimate your retirement income and explore steps that may help close a gap:
If high-interest credit card debt or personal loans are making it harder to save, meet with a financial specialist for a free, confidential review and a practical payoff plan:
The five- to 10-year countdown
Where you are in life: Retirement is starting to feel real. You may be picturing what your days, priorities and budget could look like after full-time work.
What’s on your mind: “Can I afford to leave a steady paycheck? What if the market drops just before I retire?”
What to focus on now:
- Use IRS catch-up contribution rules, if eligible, to add more to your retirement accounts.
- Protect the savings you’ve built by gradually moving some money into more stable options, based on your plan and risk tolerance.
- Create a realistic retirement budget that includes everyday expenses, travel, hobbies and the unexpected.
Boosting your savings with catch-up contributions
Starting at age 50, eligible savers can contribute more:
- Workplace plans: Save beyond the standard limit.
- Traditional or Roth IRAs: Make an extrr annual deposit.
Review limits, eligibility and deadlines:
Protecting your savings from market swings
Market declines near retirement can be especially harmful because you have less time to recover.
To reduce the need to sell investments during a downturn, consider keeping one to three years of living expenses in stable, accessible savings.
Build a stable, accessible reserve for near-term expenses:
Making the transition and enjoying what’s next
Where you are in life: You may be within a few years of retirement or settling into your first months after leaving full-time work.
What’s on your mind: “Which account should I use first? When should I claim Social Security? How will I cover health care before and after Medicare?”
What to focus on now:
- Build a tax-smart withdrawal plan so you can draw income from your accounts efficiently.
- Choose when to claim Social Security based on your health, goals and household needs.
- Learn what Medicare covers, what it doesn’t and how to prepare for out-of-pocket health care costs.
Choosing when to claim Social Security
You can claim Social Security from age 62, but waiting increases your monthly benefit.
- Age 62: Benefits may be up to 30% lower.
- Full retirement age, 66–67: Receive 100% of earned benefit.
- Age 70: Receive the maximum monthly benefit.
Consider your work plans, health, longevity and spousal benefits when deciding.
Choose the right time to claim Social Security:
Creating a retirement paycheck
Make your retirement income feel more like a steady paycheck. Keep it simple with three steps:
- Checking: Direct Social Security, pensions and other regular income here.
- Savings: Set aside six to 12 months of expenses for the unexpected.
- Automatic transfer: Move the same amount to checking each month.
Plan a monthly budget that works for you:
Get in Touch
Preparing for retirement is a great time for a quick financial tune-up. In a free, one-on-one consultation, a financial specialist will review your credit and help optimize your everyday cash flow so your finances are aligned with your retirement goals—without judgment or obligation.
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Guided by a team of experienced financial professionals, Wealth Management at UW Credit Union* partners with LPL Financial to provide personalized retirement and wealth management services for a range of client goals and portfolio objectives.