Planning for retirement is one of the most important financial journeys you’ll ever make. Yet many pre-retirees underestimate the complexity of transitioning from saving to actually living off those savings. According to AARP, making smart moves in the years leading up to retirement can significantly improve your long-term security.
But where do you start? Let’s explore seven essential steps—supported by expert insights—that can help you retire with confidence.
1. Take Inventory of Your Retirement Savings
You can’t plan effectively without knowing where you stand today. Review your balances across 401(k)s, IRAs, pensions, and brokerage accounts. Fidelity reports that the average retirement account balance was $127,300 in Q2 2024, but what really matters is whether your savings are on pace for your goals.
Here’s a snapshot of average retirement balances by age group, based on Fidelity’s analysis:
| Age Group | Average Retirement Account Balance |
|---|---|
| Under 35 | $39,100 |
| 35 – 44 | $124,700 |
| 45 – 54 | $221,700 |
| 55 – 64 | $232,700 |
| 65+ | $270,700 |
???? Download the Retirement Success Graph app to instantly project whether your current savings path can sustain your retirement lifestyle.
For additional insights, see our blog post on average balances and retirement savings realities.
2. Understand Your Income Sources
Social Security is a cornerstone of retirement income for many. The Social Security Administration offers tools to estimate your monthly benefits. If you have a pension, review payout options carefully. Don’t forget to consider annuities or other guaranteed income streams that could provide peace of mind.
Looking for practical tools? Explore our guide to Social Security planning to see how timing impacts your benefits.
3. Create a Realistic Retirement Budget
According to U.S. Bureau of Labor Statistics data, average annual spending for households led by someone 65+ is nearly $57,000. Map out your expected expenses—including housing, healthcare, travel, and leisure—and compare them against projected income.
We’ve written before about retirement lifestyle planning, including tips for managing spending and avoiding common pitfalls.
4. Plan for Healthcare Costs
Healthcare can be one of the largest retirement expenses. A 65-year-old couple retiring today will need an estimated $315,000 for medical expenses over their lifetime, according to HealthView Services. Make sure you understand Medicare, Medigap, and long-term care insurance options.
Not sure where to start? Our article on preparing for healthcare costs in retirement breaks down what you need to know.
5. Reduce Debt Before Retiring
Carrying debt into retirement can significantly reduce your financial flexibility. The Federal Reserve highlights that older adults with debt report lower financial well-being. Prioritize paying down high-interest balances before your last paycheck.
Learn more in our blog series on debt-free retirement strategies.
6. Test Your Plan with Multiple Scenarios
Markets fluctuate. Inflation rises and falls. Life happens. Running “what if” scenarios can help you see how your plan performs under different conditions. The Retirement Success Graph app uses advanced modeling—similar to tools used by financial professionals—to stress test your retirement plan against market volatility and longevity risks.
For more, check our feature on why stress-testing your plan matters.
7. Decide When to Retire
Timing is everything. Retiring even a year or two earlier—or later—can have a dramatic impact on your long-term security. The Center for Retirement Research at Boston College notes that delaying retirement boosts Social Security benefits and gives your savings more time to grow.
If you’re weighing early retirement, read our article on retiring before 65 for strategies and trade-offs.
Putting It All Together
The years before retirement are a crucial window of opportunity. By reviewing your savings, building a budget, planning for healthcare, and testing your plan with tools like Retirement Success Graph, you can step into retirement with greater confidence.
???? Ready to see if your retirement plan is on track?
Download Retirement Success Graph today and take control of your future.
