Retirement Planning

Retirement can be a daunting topic but you can make it easier by starting your retirement planning early, seeking advice, and settling on a strategy you can put into motion decades before you retire.

Frequently Asked Questions

  • How much money do you need to retire?

    You can know how much money you’ll need to retire by following a series of steps that provide a ballpark dollar amount. Calculate the income you need during retirement, estimate additional income sources like Social Security, use the 4% rule, and then determine how much you need to save to hit your goal.

  • How do you retire early?

    By planning ahead. Some of the most important decisions you can make as you plan to retire early include setting an age at which you want to retire, whether you’ll work when you’re retired, what level of income you’ll need once you retire. This process will require you to choose investment strategies, a choice that could be easier by hiring a trustworthy financial advisor.

  • What’s a good when-can-I-retire calculator?

    The best retirement calculators are accurate, easy to use, informative, and provide a weighted result. Based on The Balance’s research, the MaxiFi (formerly ESPlanner BASIC) and NewRetirement retirement calculators are the best available retirement calculators on the market.

  • How long will your retirement savings last?

    The answer to this question depends on a variety of factors, including how long you live, your health care expenses, inflation, how much you withdraw and spend, your rate of return, and your sequence of returns. These factors aside, one popular method of knowing how long your retirement will last is the 4% rule.

  • How old do you have to be to retire?

    There is no single answer for how old you have to be to retire. The age at which you leave the workforce depends on many factors. However, the average age of retirement in the U.S. is 65 for men and 63 for women as of 2021. It may help to take some time to figure out if you have enough money to retire.

  • What is the multiply-by-25 rule for retirement saving?

    The 25x rule provides a lump-sum amount that allows you to make steady withdrawals each year for a span of 30 years. It works because it allows you to gauge your retirement needs without having to factor in a vast number of unknowns, and with a bit of cushion built-in. The 25x rule is one of several retirement rules, including the $1,000-a-month rule.

  • What’s the difference between a traditional IRA and a Roth IRA?

    The main difference between traditional and Roth IRAs is when you pay taxes. Traditional IRA contributions can be taxed when they’re made but you’ll pay income taxes when you withdraw the funds during retirement, whereas Roth IRA contributions are made with after-tax dollars.

Key Terms

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Retirement Planning:

Page Sources

  1. American Enterprise Institute. "The Average US Retirement Age Increased Over the Past 30 Years," Page 2.

  2. Fidelity. "The FIRE Movement Is Alive and Well."

  3. Internal Revenue Service. "Topic No. 451 Individual Retirement Arrangements (IRAs)."

  4. Internal Revenue Service. "401(k) Plan Overview."

  5. Internal Revenue Service. "Definitions."

  6. Washington State Department of Retirement Systems. "Beneficiary Designation," Page 2.

  7. Internal Revenue Service. "IRC 403(b) Tax-Sheltered Annuity Plans."

  8. Internal Revenue Service. "Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)," Page 12.

  9. Internal Revenue Service. "Traditional IRAs."

  10. Internal Revenue Service. "401(k) Plans."

  11. Internal Revenue Service. "Roth Comparison Chart."

  12. U.S. Department of Labor. "Advisory Council Report on Stable Value Funds and Retirement Security in the Current Economic Conditions."

  13. Internal Revenue Service. "Retirement Topics — Required Minimum Distributions (RMDs)."