Key takeaways
Essential retirement planning starts with assessing your timeline, estimating future living and health care expenses, and mapping out expected income sources like Social Security or pensions.
Calculating the monthly gap between your expected expenses and fixed income determines how much you need to save and withdraw from your retirement portfolio.
Core financial rules of thumb — such as saving 25 times your annual expenses or aiming to replace 70% to 80% of your pre-retirement pay — provide a reliable starting baseline for your total savings goal.
Building a reliable retirement nest egg relies on consistent, tax-advantaged savings through employer 401(k)s and individual retirement accounts (IRAs), taking full advantage of employer matching and automated contributions.
Periodically reviewing your retirement strategy and adjusting your investment mix helps keep your portfolio on track while gradually reducing risk as you near your target date.
Regardless of your specific goals or timeframe, the key to a financially confident retirement is proper planning to create a financial roadmap for how much to save, invest, and eventually withdraw so you can maintain your desired lifestyle after you stop working.
With a solid retirement plan in place, you’ll have a framework to follow throughout your working life. And you could be in a better position to know what to do at each stage: how much to save, how to invest, when to adjust your budget, and whether you’re still on track as your life circumstances or goals change.
Without a plan, you won’t have an accurate idea of whether you’re on track to meet your goal, and you could fall short.
If you’re not sure where you stand, you’re in good company: Just 13% of working Americans feel exactly on track to save enough for the lifestyle they want in retirement, and 45% say they’re somewhat or very far off track.1 In fact, when Americans rank their financial concerns, the one they name most is whether their retirement savings will last as long as needed.2
Whether you’re just starting to think about retirement or trying to estimate how much you’ll need, this guide walks through the basics:
Retirement planning rules of thumb.
How to set retirement goals.
How much retirement income you might need.
How much retirement income you might expect from Social Security.
How to choose retirement savings vehicles.
You’ll also learn when to use online retirement calculators and how to choose a financial advisor if you want help with retirement planning details now or in the future.
First, learn the three rules of thumb of planning for retirement
At the heart of the retirement planning process is estimating how much money you will need to save during your working years. These three rules of thumb can be helpful for estimating your needs, though remember that they're general rules that may not be right for every person or situation.
1. The 25 times rule
According to the 25 times rule, one should accumulate retirement savings equal to 25 times their annual expenses. For example, if your estimated annual expenses are $50,000, you would want $1,250,000 in savings to meet the 25 times rule.
2. The 4% rule
According to the 4% rule, a person can withdraw 4% of their retirement savings in the first year of retirement and adjust subsequent withdrawals for inflation in the following years. At this withdrawal rate, their savings could possibly last around 30 years without running out of money. For example, if a person’s retirement fund is $1 million, they can withdraw roughly $40,000 per year (4% of $1,000,000).
3. The 70–80% rule
A commonly suggested benchmark is a retirement income that replaces around 70%–80% of your pre-retirement annual income. For example, if you earn $100,000 per year in your final working years, you’ll want to aim for $70,000–$80,000 per year in retirement income (or withdrawals from savings).
Applying these three recommendations individually or in combination is a great way to simplify the retirement planning process and can help you get a ballpark estimate of how much you'll have to save.
Of course, everyone’s situation, circumstances, goals, and needs will differ, so it's important to remember that these are not really “rule” but general guidelines. You should also note that they are based on certain assumptions, such as having retirement funds invested in a diversified portfolio with moderate risk.
What are the first steps of retirement planning?
With the three key retirement planning rules in hand, you’ll be ready to start the retirement planning process. Take it step by step, as outlined below, to simplify the process.
1. Figure out when your retirement will start and how long it might last
When would you like to retire? Will you shoot for the median retirement age of 62, or do you plan to continue working to 65?3 Or later?
You’re not locked into one answer, either. Guardian data finds 36% of full-time working Americans expect to retire between ages 65 and 69 — and two-thirds anticipate a retirement that includes working in some capacity, whether that’s part-time work, consulting, or an entrepreneurial pursuit.4
Take a best guess based on your current circumstances and goals. It’s important to know approximately how many working years you’ll have to build your retirement fund.
You can also look at national averages for life expectancy. According to data from the Social Security Administration, a typical 65-year-old male can expect an approximate 18-year retirement on average, while a 65-year-old female can expect a 20-year retirement.
Keep in mind that you can begin receiving Social Security benefits at age 62, but your monthly payout will be reduced if you claim early. Medicare also doesn’t start until age 65, so you’ll need to maintain private health insurance before then. If you choose to retire at an early age, you’ll want to account for these fluctuations in benefits during your retirement years.
2. Determine what type of lifestyle you want in retirement
Next, think about what kind of lifestyle you’d like to achieve or maintain after you stop working, and make sure your retirement budget aligns with how you want to spend your free time. Here are some questions to ask yourself:
Do you plan to stay in your current home and maintain your current lifestyle?
Do you hope to move to a more upscale resort location where housing and other costs may be higher?
Are you looking forward to extensive travel or other costly endeavors?
Do you intend to downsize and cut back to minimize your financial needs?
Your retirement lifestyle will, in large part, determine your retirement expenses. These expenses will also determine how much retirement savings you will need.
3. Estimate how much you will spend per year in retirement
Your goal for this step is to define your financial goals, document your assumptions, and estimate future expenses so you have a solid ballpark estimate that you can adjust as your life circumstances change or you get closer to retirement age.
Here’s how to estimate your retirement spending:
Start by recording your current monthly expenses. This will serve as a baseline for estimating lifestyle costs and how much retirement income you may need.
Consider the impact of inflation. Generally, it's advisable to assume an average inflation rate of about 3% per year. You can use an inflation calculator to help visualize how inflation might affect your spending.
Consider any anticipated lifestyle changes — such as downsizing or relocating — and how they might affect your expenses.
Add in health care costs, since medical expenses often rise with age, and Medicare doesn’t cover all health care costs. How much do you expect to spend on insurance, out-of-pocket expenses, and more?
Evaluate your outstanding debts — including mortgage payments — and determine whether they'll be paid off by the time you retire.
Think about any retirement plans you have — such as travel and new hobbies — and include the estimated costs in your calculations.
Consider any other potential expenses, from helping an adult child and their family to buying or leasing a new car.
Finally, assume that there will always be unanticipated expenses and build a cushion to account for them. For instance, if you determine that your household will spend around $75,000 per year in retirement, you may wish to round that up to $80,000 to account for various unknowns.
4. Estimate any income you will have during retirement (like Social Security)
Most retirees will have some sort of regular income in retirement, even though they're no longer working. For most Americans, this primarily comes in the form of monthly Social Security benefits, though many draw from multiple income sources.
The average monthly benefit for Americans was $1,940 as of July 2026, but your specific check will depend on various factors. You can use the Social Security Benefits Estimator to determine how much you can expect to receive each month based on your pre-retirement income (including current earnings) and your target retirement date.
Other income could include payments from pensions, interest earned from savings, rental property income, and investment income.
5. Figure out your expenses-to-income gap
Now you know how much you'll be spending and earning each month. The difference between these two numbers reflects how much you'll need to withdraw from savings or investments each month.
For example, let’s say you determine you will spend $6,000 per month in retirement. You will earn $2,000 per month from Social Security. That means you have a gap of $4,000 per month and will need to pull this sum out of savings every month.
6. Set a retirement savings goal using your calculations
If you know you need to pull $4,000 per month ($48,000 per year) from savings, you can use the 25 times recommendation as a starting point to work backward and find your goal retirement savings amount. By multiplying your annual need ($48,000) by 25, you get $1,200,000 ($1.2 million).
If you follow the 25 times rule, you want to have $1.2 million in savings and/or investments by the time you retire. But how do you get there?
7. Make an actionable retirement savings plan
The next step is to develop a retirement savings plan that can help you reach your goal. Here are some strategies to consider:
Start by setting clear retirement goals: Use the steps above to get specific with the number you need to hit and get accurate retirement spending goals.
Estimate how much you can afford to save: Looking at your current budget, calculate how much is left over after accounting for living expenses, debt repayment, and other ongoing expenditures. If you're unhappy with the number, consider where you might economize to free up additional funds.
Take full advantage of employer-sponsored retirement plans: If your employer offers a 401(k) or other retirement plan, try to contribute the maximum allowable amount each year, if possible. If your workplace offers employer matching (where your company kicks in extra money to your retirement accounts when you make contributions), even better.
Take full advantage of individual retirement accounts: If you’re self-employed or have the funds to supplement an employer-sponsored retirement plan, open an individual retirement account. IRAs offer tax advantages and a broader range of investment options. Traditional IRAs provide tax-deferred growth and an upfront tax deduction, while Roth IRAs offer qualified income tax-free withdrawals in retirement. Deciding between a traditional or Roth IRA is something that a financial planner could help with.
Make contributions to your retirement accounts every month: To grow your retirement savings account long-term, consistency is key. Even small amounts contributed on a regular basis to tax-advantaged accounts can benefit from compound interest, which is why starting early matters. You could set up automatic transfers to your retirement savings accounts to make it easier.
Diversify your investments: Allocate your retirement contributions across a diversified portfolio of investment options offered within the plan. Consider a combination of stocks, bonds, mutual funds, exchange-traded funds, and FDIC-insured vehicles to balance risk and potential returns, and consider target-date funds if you want allocations to adjust over time. Consider your risk tolerance and investment goals when selecting the appropriate investment mix for your retirement portfolio.
Regularly review and adjust your plan: Review your retirement savings regularly to ensure they align with your evolving financial situation, retirement plans, and goals. As you're getting ready to retire, you may want to adjust your asset allocation more conservatively to lower your portfolio's risk profile.
By following these steps for retirement planning, you could start building a retirement savings plan that works to help stablize your financial future. Starting early, maximizing savings when possible, and maintaining discipline throughout your working years will help to increase your retirement savings potential. Don’t wait for a perfect moment to begin, either: Among workers 45 and older, 55% regret not starting to save for retirement sooner, and 53% regret not saving enough.5 And remember, if you need extra help with any of these steps, consider consulting a financial advisor.
It’s also helpful to use a retirement calculator to double-check your numbers.
Are you on track? Retirement moves for every decade.
Once you have a savings goal, it can help to see how your progress compares with other households. According to the Federal Reserve’s most recent Survey of Consumer Finances, median household retirement savings is $45,000 for those aged 35–44, $115,000 for those aged 45–54, and $185,000 for those aged 55–64.6 Keep in mind that these are midpoints, not targets — the personal goal you set in step six is the number that matters. For a fuller breakdown, see our guide to average retirement savings by age.
No matter where you’re starting from, there are smart moves you can make in every decade7:
In your 20s and 30s: Enroll in your employer’s retirement plan, build emergency savings, and let time and compound growth do the heavy lifting.
In your 40s: Increase your retirement contributions and manage down debt strategically.
In your 50s: Make catch-up contributions, diversify savings across tax-advantaged options, and stress-test your retirement plan.
In your 60s and beyond: Build sustainable retirement income strategies and consider adding guaranteed income like annuities.
Use professionals for retirement planning success
Creating a retirement plan can seem daunting, especially if you haven't attempted it before. But it doesn't have to be. Understanding the first steps of retirement planning is easy enough with this guide — and if you run into roadblocks or simply want a second opinion, there are knowledgeable financial advisors who can help. There’s good evidence that guidance pays off: Among Americans who report high financial wellness, 61% work with a financial advisor.8
“Retirement isn’t the end of the story, but the beginning of a new chapter. As people live longer, fuller lives, financial planning shouldn’t just be about saving. It should help them feel confident, flexible, and free to enjoy whatever comes next,” says Erin Culek, Head of Financial Protection & Retirement Solutions at Guardian.9
Guardian can help you find a local financial advisor who can offer guidance tailored to your personal circumstances and financial goals. You can also ask friends or coworkers for recommendations. If possible, talk with a few candidates to see who you like best, and make sure they have the licensing and experience needed to create a retirement plan.
Finally, remember that the earlier you start planning for retirement, the more likely you are to reach your goals. The best time to start is right now!
Top asked questions about retirement planning
The first step of retirement planning is to consider how many years you have left in your working career, and how long you may expect your retirement to last. This gives you an idea of two key things: How many years you have to save, and how many years of expenses you'll need to save up. From there, you can build out your retirement plan and start taking clear steps toward your goals.
