Retirement planning 101: Master the basics for a fulfilling future

Retirement planning can often feel overwhelming, especially when trying to decide when to retire and if you have enough savings for the future. Taking the time to understand the retirement plan basics and exploring key strategies can help reduce stress and increase confidence about your retirement readiness. You may want to consider these planning for retirement tips—from determining your timeline to learning how to save for retirement—and set yourself up for a more comfortable retirement.

When should you start saving for retirement?

The best time to start saving for retirement is as early as possible, but it’s never too late to take the first step. By starting to save for retirement now, it’s possible to let personal savings grow and compound over time. Even small contributions at the beginning can make a big difference. By getting started now, you lay the groundwork for a more secure financial future, reach your retirement goals, and gain the flexibility to decide when to retire on your own terms.

How to save for retirement

When starting to save for retirement, it's important to take advantage of any employer-sponsored retirement plans, such as 401(k)s, if available. These plans often come with matching contributions, making them an excellent way to boost savings. For those who are self-employed or looking to supplement an employer plan, there are many options to help create income for the future or fill potential income gaps. Making retirement savings a priority ensures you have the income needed to live comfortably once your work life is behind you. Consistency in saving is an important element of retirement planning 101 and a smart answer to how to save for retirement throughout your working years.

Explore different retirement plan options

There are a variety of retirement plan basics that can help you create a well-rounded financial plan. From employer-sponsored options like 401(k)s to individual accounts such as IRAs or annuities, each solution can meet specific financial needs and can help you build assets for retirement. Life insurance policies with cash value may not be top of mind but can also provide valuable benefits for long-term savings and security.

401(k)

A 401(k) is an employer-sponsored retirement plan that allows employees to contribute a portion of their salary before taxes, with the potential for employer matching contributions. This plan offers a simple and effective way to save for retirement, reduce taxable income, and can help individuals build their retirement savings through regular, automated contributions.

Individual retirement account (IRA)

An IRA is a personal retirement savings account that can help you save for retirement with potential tax benefits. There are two main types: a Traditional IRA, where contributions may be tax-deductible and taxes are paid upon withdrawal, and a Roth IRA, where contributions are after-tax, but withdrawals are tax-free in retirement. IRAs may be ideal if you want more control over your retirement savings or don’t have access to an employer-sponsored plan.

Annuities

An annuity is a financial product that provides a guaranteed income stream for retirement. It is purchased with a lump sum or through a series of payments and can be structured to offer income for a set period or for life. Annuities can help reduce the risk of outliving your savings. Some can also help grow savings and provide income for as long as you live.

Life insurance for retirement

Certain permanent life insurance policies included in your retirement strategy can provide both a death benefit and a cash value component that grows over time. The cash value can be accessed through loans or withdrawals and is a potential supplemental income source in retirement. This can offer long-term financial security and diversify your overall retirement income strategy.

How to know when to retire

How to know when to retire is a deeply personal question with many variables—including when you began saving, your chosen retirement plan basics, your retirement income strategy, and your desired lifestyle in retirement. To help determine your retirement timeline, review:

• Financial preparedness
• Health and longevity assumptions
• Retirement goals and activities
• Social Security and other benefits
• Level of debt

Retirement planning is an ongoing process. Adjusting your approach as circumstances change is a fundamental part of retirement planning 101 and allows you to keep working toward your financial goals throughout your career.

What age do most people retire?

What age do people typically retire? Determining when to retire is a personal decision that depends on individual circumstances, financial readiness, and health. According to the Center for Retirement Research at Boston College, in 2024 the average retirement age in the U.S. was approximately 64.6 for men and 62.6 for women.₁ Many people may choose to retire at 62 because that's the earliest age to begin receiving Social Security benefits, although waiting until full retirement age (FRA) or even later can result in higher monthly benefits. A person’s full retirement age is typically between 66 and 67, depending on their birth year. If a person starts receiving Social Security benefits before their FRA, their benefits can be reduced by a small percentage for each month before their full retirement age.

5 retirement planning basics and tips to start planning for retirement today

Once you understand the retirement planning basics, it's time to take the next steps toward helping secure your financial future. The earlier one begins planning, the more time there is to build savings and help create a stable retirement. Below are five key planning for retirement tips to help lay a strong foundation and get started on the right path. 

1. Start to save for retirement early

Early planning for retirement can offer significant advantages, including allowing more time for savings and investments to grow over time and helping create a larger retirement fund. Consistent saving practices, regardless of how much, is essential for helping build a secure financial future and ensuring a smoother transition into retirement. 

2. Know what retirement options are available

Take time to review which retirement options are available, such as employer-sponsored plans like 401(k)s that often include employer matching contributions. Taking full advantage of these benefits can help maximize retirement savings without additional cost and help you build greater financial security for the future. 

3. Don’t dip into savings before reaching retirement

When possible, leave retirement savings for their intended purpose: funding retirement. Dipping into these savings before reaching retirement can often affect long-term financial security. If switching jobs, make sure to evaluate the options available to you within your retirement plan. Some retirement plans may penalize early withdrawals and charge taxes, which could further reduce the amount of money set aside for the future. Creating an emergency fund and leaving retirement savings to grow can help keep you on track to having the income needed for a more stable retirement. 

4. Strike a balance between risk and reward

When planning for the future, it’s important to strike a balance between risk and reward in a financial strategy. Risk refers to the potential for loss, while reward refers to the potential for growth. As individuals approach retirement, it’s common to gradually reduce risk by shifting investments and financial products into more stable, conservative options. Younger savers may have the opportunity to take on more risk, aiming for higher returns, while those closer to retirement may wish to preserve capital and ensure a steady income stream. Finding the right balance can help maximize growth potential while managing the risks that can come with different stages of life. 

5. Work with a financial professional to plan ahead

Partnering with a financial professional can make a significant difference in planning for a secure retirement. They can help tailor a strategy that aligns with personal goals, risk tolerance, and retirement timeline, plus help you explore retirement savings options, find ways to close income gaps, and answer any questions. With their expertise, you can cover retirement planning basics and get the information needed to make informed decisions about savings, investments, and an overall retirement strategy.

Starting to save for retirement? Midland National can help

Getting a head start on retirement savings is one of the best ways to ensure a more financially stable future. By taking advantage of available retirement options, maintaining healthy saving habits, and creating a well-rounded financial strategy, individuals can help set themselves up for long-term financial security. Remember, retirement planning is a journey, and the earlier you take those first steps, the more options you can have when it comes time to retire. Find an agent today to help you start your path.

¹Center for Retirement Research at Boston College. (2024, March 28). Will the average retirement age keep rising? https://crr.bc.edu/will-the-average-retirement-age-keep-rising/

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

B2-MN-7-25