How to Plan For Retirement

Although older adults become eligible for Medicare at age 65, many continue to keep working well past the age of 70. In fact, 31.9% of adults between the ages of 65 and 74 are expected to be in the workforce in 2024, according to the AARP.

Even if you wait a few years to retire, you could spend 10 years or more in retirement, making retirement planning extremely important for ensuring you have enough money to pay for necessities after you stop working. 

As of 2024, the average life expectancy in the United States was 77.28 years; if you retire at 65, you would need to have enough money in your investment accounts to cover nearly 14 years of expenses. If you're in good health and expect to live longer than the average person, you'd need even more.

Unfortunately, not everyone does a good job of planning ahead. CNBC reports that 15% of Americans have absolutely no retirement savings. Approximately 17% of survey respondents reported that they had less than $75,000 saved.

If you're a little behind on your retirement planning, don't despair. Follow these retirement tips to increase your income and reduce your expenses. 

Setting and Reaching Financial Goals

Why is planning for retirement important?

Planning ahead for your retirement is important for several reasons. If you develop arthritis or another chronic ailment as you get older, you may not be able to work as long as you planned. You'll need retirement savings to ensure you can pay your expenses when you no longer have a job. People are also living much longer than they did in the past. According to the Social Security Administration, the average life expectancy in 1930 was only 58 for men and 62 for women. With the average life expectancy now nearing 80 years old, you'll need to be prepared for a longer retirement. 

It's important to have enough money for basic necessities, but if you want to spend your retirement traveling around the world or enjoying new hobbies, you'll need enough money to cover these extra expenses. Planning ahead can help you meet your financial goals and make your retirement more enjoyable. 

How do I create a retirement plan?

To create a successful retirement plan, you'll need to consider several factors. 

  • How long do you plan to work? 
  • Do you have any health issues that could cause you to retire earlier than expected? 
  • What do you want to do while you're retired? Do you want to spend time in your garden, or do you want to buy an RV and drive around the country? 
  • How much money do you need to maintain your lifestyle? 
  • What will you do if you need long-term care? Do you have a family member who can care for you, or would you have to pay a home health aide or enter a long-term care facility? 

Once you answer these questions, meet with a financial adviser to discuss the best retirement plans to help you meet your goals. 

What is the best option for retirement planning?

Retirement planning is extremely personal; what works well for one person may not work for you. Unless you're an experienced investor, it's best to meet with a licensed financial professional to learn how to plan for retirement in a way that helps you meet your future financial goals. 

Saving Money

401(k) and Solo 401(k)

A 401(k) is a type of retirement account that lets you set aside a portion of your income for retirement. It is a tax-deferred account, which means your contributions are not counted as part of your taxable income; however, you do pay tax on any money you withdraw from your 401(k). Using a 401(k) to save for retirement has several benefits: 

  • Depending on how much you contribute to your 401(k), your taxable income may be reduced enough to put you in a lower tax bracket. This means your income tax bill may be lower than it would be if you put your money in an account that is not tax-deferred. 

  • As long as money stays in your 401(k), you don't have to pay tax on it. Therefore, you can earn compound interest on your gains, increasing the value of the account. If you had a regular investment account, you'd have to pay taxes on your net gains each year. 

  • Many employers match their employees' contributions, increasing the value of your account without taking extra money out of your pocket. 

A solo 401(k), also known as a self-employed 401(k) or one-participant 401(k), is designed for business owners with no employees. This type of plan can also be used to cover the business owner's spouse.¹ With this type of plan, you can set aside up to 100% of your compensation in a 401(k) account, provided your contribution does not exceed the annual contribution limit. For 2024, the limit is $30,500 if you're 50 or older and $23,000 if you're under the age of 50. 


The 403(b), also referred to as a tax-sheltered annuity (TSA) plan, is available to employees of public schools and some nonprofit organizations. It may also be available to ministers, church employees and employees of school systems operated by tribal nations.² Like a 401(k), a 403(b) allows you to set aside a portion of your income in a tax-deferred account. Gains are not taxed until you withdraw from the 403(b), which helps you take advantage of the power of compound interest. Your employer can also contribute to your account, increasing the amount of money you have available for retirement. 


A 457(b) plan is established by local and state governments to ensure that public employees have the opportunity to save for retirement. With one of these plans, contributions are taken from your wages and invested. The tax advantages are similar to those offered by a 401(k); you don't pay any taxes on the money until you withdraw it, and your gains are not taxed, which means you'll be able to earn additional interest.³ 


The U.S. Securities and Exchange Commission defines an annuity as a contract between an individual and an insurance company. The contract states that the insurance company will make payments to you at some point in time. Buying annuities can help you with financial planning for retirement because they offer three key benefits: 

  • You don't pay any taxes on your gains until you make a withdrawal. 
  • You'll receive regular payments, which can make it easier to cover your monthly expenses once you reach retirement age. 
  • If you die before you start receiving payments, the person you designated as your beneficiary — such as a spouse — will receive the money. 

Pension Plans

A pension plan is established by an employer or a labor union to ensure that workers have some type of retirement income. Pensions are classified as defined-benefit plans, which means you'll receive a fixed payment once you retire. How much you receive during retirement depends on how much you earned while you were employed and how many years of service you accumulated with your employer. Pension plans have several benefits: 

  • You receive regular payments. 
  • You may be able to retire earlier.
  • Because the payments are fixed, you'll be able to do a better job planning your budget. 
  • Payment amounts are usually tied to your salary and number of years of service, which means you can avoid the market fluctuations associated with investment accounts. 

Despite these benefits, pension plans also have some drawbacks. 

  • You don't get to control the timing or the amount of each payment. With other types of retirement accounts, you can choose when to make a withdrawal, or you can take out more money if your expenses increase. 
  • Your pension payment is likely to remain the same over time, even if prices increase. 
  • If you want your spouse to receive survivor benefits, your payment will be reduced. Furthermore, if you choose a 50% or 75% survivor benefit, your spouse will not receive as much money as he or she would if you selected a 100% survivor benefit. 
  • You don't have any control over how pension funds are invested. 

Individual Retirement Arrangements (IRA)

Traditional IRA

A traditional IRA is a tax-advantaged retirement option that lets you set aside money and not pay tax on it until you make a withdrawal. Another benefit of a traditional IRA is that you may be able to take a tax deduction for your contributions, subject to certain limits set by the IRS. Your tax deduction may be limited if you have a traditional IRA in addition to an employer-sponsored plan. If your employer doesn't offer a retirement plan, you can take the full deduction. 

Roth IRA

A Roth IRA also allows you to set aside money for retirement; the main difference is that you make contributions with income that has already been taxed. As a result, you don't have to pay tax on qualified distributions. Another benefit of a Roth IRA is that you can continue contributing to it even after you reach the age of 70½. The main disadvantage of a Roth IRA is that you can't deduct your contributions on your tax return. 

Budgeting Tips

For older adults living on a fixed income, it's important to reduce expenses as much as possible. The less money you have going out every month, the more you should be able to save. Reducing your expenses starts with creating a budget to assess your current situation and set goals for the future. Once you have a monthly budget in place, you can reduce your expenses by using coupons, taking advantage of discount offers, shopping around for better insurance rates and making some lifestyle changes. 


A budget lists all of your income and expenses for a given period, usually one month. If you earn more than you spend, you'll have a surplus; spending more than you bring in leads to a deficit. Budgeting is helpful because it can help you identify financial habits that could lead to trouble down the road; for example, many people don't realize they're spending thousands of dollars per month dining out until they sit down and write out a formal budget. 

Budgeting Process

To create your first budget, follow these basic steps. 

  1. Gather as much information as possible to ensure you don't forget about any income or expenses. You'll need pay stubs, account statements, utility bills and any other documents that can help you determine how much you earn and spend each month. 

  2. At the top of the page, write down every source of income you have. This includes money earned from working, bank interest, investment income, money earned from operating a business, Social Security payments and payments from a pension plan. 

  3. Add up your sources of income to determine how much money you have coming in each month. 

  4. Once you record your income, start recording your expenses. If necessary, look at past bank statements to determine how much you spend on categories such as grocery stores, restaurants, subscriptions, medical expenses and pet expenses. 

  5. Add up your expenses to determine how much you spend each month. 

  6. Subtract your expenses from your income. If your income exceeds your expenses, you have a budget surplus. The extra funds can be deposited into a savings account, earmarked for a large expense or added to one of your investment accounts. If your expenses exceed your income, you have a deficit. You'll need to find a way to bring in more money or reduce your expenses. 

Expense Categories

When you first start budgeting, it's easy to forget about all those purchases you make without thinking. Five dollars for a cup of coffee, $10 per month for a magazine subscription and $25 for lunch with friends can add up quickly, causing your expenses to be much higher than you expected. To ensure your budget is as accurate as possible, make sure you account for the following expenses: 

  • Rent or mortgage payment 
  • Monthly debt payments (credit card minimums, loan payments, etc.) 
  • Subscriptions (newspapers, magazines, apps, satellite radio, music streaming, TV/movie streaming, etc.) 
  • Entertainment 
  • Dining out 
  • Household items (paper towels, dish soap, cleaning products, etc.) 
  • Toiletries 
  • Pet supplies 
  • Insurance premiums (health, auto, life, disability, accidental death, long-term care, liability, umbrella policies, etc.) 
  • Public transportation 
  • Groceries 
  • Heating fuel 
  • Gasoline for cars, trucks and other vehicles 
  • Clothing and accessories 
  • Personal services (housekeeping, dry cleaning, babysitting, etc.) 
  • Vehicle maintenance and repairs 
  • Charitable contributions 
  • Property taxes 
  • Parking fees 
  • Gym membership 
  • Personal care (manicures, hair cuts, hair extensions, cosmetics, etc.) 
  • Home furnishings 

Budgeting Apps

A paper-based budget works just fine, but using a budgeting app ensures that you can pull up your budget at any time — all you need is a smartphone or tablet. Using a budgeting app can also help you track your spending in real time, as you can enter each expenditure immediately, rather than waiting until you have time to update your paper budget. If electronic budgeting appeals to you, try one of these apps: 

  • Mint 
  • You Need a Budget (YNAB) 
  • EveryDollar 
  • Goodbudget 
  • Mvelopes 
  • Wally 
  • Simple 


Couponing is a great way to help keep more money in your pocket for retirement savings. 

Two types of coupons can help you save money on everything from groceries to oil changes: store coupons and manufacturer coupons. Retailers issue store coupons to drive traffic to their online and brick-and-mortar locations, while manufacturers issue coupons to entice people to try certain products. 

A store coupon may entitle you to a certain percentage off your order (e.g. 20% off any purchase of $100 or more) or a flat discount (e.g. $5 off any purchase of $20 or more). Manufacturer coupons usually offer a discount on the purchase of a specific item (e.g. $1 off your purchase of any Degree deodorant), although some companies issue buy one, get one free coupons that make it possible to buy two items for the price of one. 

Coupon Sources

Your local newspaper is a great place to find coupons, but don't overlook these coupon sources: 

  • Some stores have coupon machines in their aisles. Next time you go shopping, check to see if there are any coupons available for the items you plan to buy. 

  • If you want to take advantage of a great deal and need multiples of the same coupon, check out Klip2Save or another coupon website. It's against the law to sell coupons, but it's perfectly legal to charge a fee for the service of clipping the coupons and mailing them. These sites typically charge 10 or 20 cents per coupon. 

  • Join a coupon exchange. If you have coupons you don't need, you can trade with other people for coupons you'll use. 

  • Coupon websites are an excellent source of manufacturer coupons. Check out RedPlum, and SmartSource to get started. 

  • Many stores print coupons in their advertisements and weekly circulars. Instead of throwing away these materials when they come in the mail, flip through them to see if you can find a coupon. 

  • Manufacturers often send coupons to customers who contact them via email or postal mail. If you have some extra time, write letters to the manufacturers of your favorite products. In your letter, write about how much you like the product or how the product has helped you improve your life. You may receive a coupon in return. 

Coupon Stacking and Doubling

For best results, "stack" store coupons with manufacturer coupons to get an even bigger discount. If you have a $1 manufacturer coupon and a $1 store coupon for the same item, you'll double your savings just by using both coupons at the same time. For even bigger discounts, shop at stores that double coupons. If you have a coupon for 50 cents off an item, some stores will double the discount to $1, making it even easier to reduce your expenses. 

Coupon Terms

Before you start shopping, familiarize yourself with the terms listed on each coupon. Taking a few minutes to understand these terms can help you avoid the frustration of having your coupons rejected when you're ready to check out. Many coupons have restrictions regarding the size or dollar amount of a purchase. For example, you may see the phrase "Excludes trial sizes" on coupons for toiletries. This means that the coupon is only valid on full-size products. 

Buy one, get one free coupons often have the phrase "up to" and a maximum dollar amount. For example, a BOGO coupon for shampoo might read, "Buy one, get one free up to $12.99." This means that the maximum value of the coupon is $12.99. On other coupons, you may see restrictions related to the type of product included in the promotion. A good example is the coupons issued when manufacturers release new fragrances or product formulas. For example, a Crest coupon might state that the coupon is only valid on whitening products. If you purchased regular toothpaste, you wouldn't be able to use the coupon. 


Another good way to reduce your expenses and save for retirement is to take advantage of discounts whenever possible. Many restaurants and grocery stores offer discounts to older adults; for example, Dairy Queen offers a 10% discount. Some restaurants also have special menus just for older adults who want smaller portion sizes at a lower price. Denny's and IHOP are good examples. Both restaurants have menu items just for people who are at least 55 years old. If you are a member of the AARP, your membership may also entitle you to discounts at restaurants, entertainment venues and specialty retailers. 

Cash Discounts

When you use your credit card to make a purchase, the retailer has to pay a processing fee. The typical merchant fee is around 2% to 3%, but some companies charge a little more.10 Although these fees can be costly for retailers, they can also help you get a discount if you're willing to spend your hard-earned cash instead of using a credit card. Next time you make a large purchase, ask the store manager if you can have a discount for paying in cash. Explain that the store will save money by offering you a small discount instead of paying the processing fee on a large credit transaction. 

Loyalty Clubs

Signing up for a store's loyalty club can help you qualify for discounts throughout the year. Some loyalty programs are points-based, which means you earn points every time you make a purchase. For example, Christopher & Banks operates the Friendship Rewards club, a tier-based program that gives shoppers discounts based on how much they spend each calendar year. The Gold level gives shoppers two discounts per year if they spend $100 to $249. Additional discounts are available for shoppers who spend enough to reach the Platinum and Diamond tiers of the program. 


Don't be afraid to negotiate, especially if you're spending a lot of money. You don't need to be aggressive, but you do need to make a firm request and be prepared to walk away if the other person won't budge. Negotiation is appropriate for almost any situation in which you want a lower price. 

  • If you've been renting the same house for several years and have a history of on-time payments, ask your landlord for a small discount on rent. It costs a lot of money to advertise a rental and get it ready for a new tenant, so your landlord may be willing to cut you a break. 
  • Call your credit card company and ask for a lower interest rate. 
  • Don't pay the price listed on the invoice at a car dealership. Negotiate with the salesperson for a lower price; if this doesn't work, ask the salesperson to throw in some extra features without increasing the price of the vehicle. 
  • Ask the bank manager to waive your monthly fee or give you an ongoing discount on banking charges. 
  • If you're willing to buy an appliance with a small scratch or dent in it, ask the manager to give you a discount. 

Rewards Points

If you have a credit card that offers points on every purchase, use your card wisely to accumulate points and use them for discounts on gift cards. The key to using this tactic successfully is to make sure you have enough cash available to pay your credit card balance as soon as the transaction posts. If you pay your balance right away, you'll avoid interest charges, and you won't fall into the trap of getting into debt while you're trying to save money. 

Health Insurance

In the United States, Medicare is available to adults who have reached the age of 65. If you're not eligible for Medicare yet, you can still save money on your health insurance premiums and co-pays. To lower your out-of-pocket costs and put more money towards retirement, try the following: 

  • Increase your deductible. Assuming everything else stays the same, the premium for a plan with a $2,500 deductible will be lower than the premium for a plan with a $500 deductible. 

  • Shop around. If you purchase insurance through the marketplace instead of getting it from an employer, shopping around for coverage can help you save money. Review each plan carefully to understand what kind of coverage you'll be getting. 

  • If possible, buy over-the-counter medications instead of having a pharmacy fill your prescription. This won't work if your medication is available by prescription only, but it can help you save money if your doctor prescribes a vitamin or mineral supplement. For example, it often costs less to buy a bottle of vitamin D at the grocery store than it does to have a pharmacist fill a prescription for the same product. 

  • Make sure you use hospitals and doctors that are in-network for your insurance plan. Insurers pay a larger percentage of the bill for in-network providers than they do for out-of-network providers.
  • Attend free screenings in your community instead of paying to have the tests performed at a hospital or laboratory. In the United States, the average cost of a cholesterol blood test exceeds $60. Even if your insurance covers some of the cost, you may have to pay a co-pay, increasing your out-of-pocket costs. Some hospitals and clinics offer free cholesterol screening once or twice per year; taking advantage of this free screening can help you save money. 

Lifestyle Changes

If you have a budget deficit, or if you're concerned about your ability to live comfortably as you get older and closer to retirement, making several lifestyle changes can help you save money or increase your income, giving you more of a financial cushion. 

Cash vs. Credit

Unless you pay your balance in full every month, using a credit card for everyday purchases can cost you a lot of money. Not only do you have to pay interest on your purchases, but you may also have to pay annual fees, over-limit fees and late payment fees. If you can't pay off your card each month, make an effort to use cash — or your debit card — for every purchase. You'll avoid interest charges, and you'll be less tempted to purchase things you can't really afford. 

Free Entertainment

Going to the movies, attending a concert and watching a pro football game from the sidelines are all great ways to spend your time, but they can be costly. As you get older, save money by looking for ways to stay entertained without paying any money. 

  • Local schools often put on free concerts to entice people to support their bands, choruses and orchestras. If you love music, attend one of these free concerts. 
  • If your city has public sports facilities, use them instead of paying a fee to join a tennis club or use a private golf course. 
  • Instead of paying for a streaming TV service, use Crackle, Tubi or Pluto TV. These free streaming services are supported by ad revenue, giving you a no-cost way to enjoy some of your favorite TV shows and movies. 
  • Take a walk in a nearby park or forest. 
  • Play a board game or put together a puzzle at home. 
  • Pick up a new hobby that doesn't require expensive supplies. With free online tutorials, you can learn to sew, decorate a cake or practice yoga. 
  • Ask your local theater manager if you can attend a dress rehearsal of a play or musical for free. 
  • Volunteer for your favorite cause. It costs nothing but your time, and it's a great way to make a difference and stay connected with people in your community. 

Generic Products

If you always buy brand-name products, switching to generic can save you hundreds or even thousands of dollars per year. The money you save can go towards retirement or even a short-term savings account. In some cases, the generic version is exactly the same as the brand-name version, except it doesn't have the expensive packaging. Try buying generic sugar, flour, salt, herbs and spices, toilet paper and paper towels to save money on items you use regularly. 

Meal Planning

Food costs are a major concern for anyone who's trying to reduce expenses. After all, you can stop going to concerts and buying movie tickets, but you can't stop eating. One way to reduce your monthly food costs is to start planning your meals ahead of time and shopping based on your menu. To save even more money, follow these tips: 

  • Plan your weekly menu around ingredients you already have in your pantry, refrigerator and freezer. If you already have crushed tomatoes and tomato paste on hand, for example, you might want to add lasagna or spaghetti with marinara sauce to your meal plan. 

  • Think seasonally. If you buy produce when it's in season, you'll spend less money, and you'll also get fruits and vegetables when they're at their freshest. Summer is the best time to buy strawberries, watermelon, zucchini and blueberries, while April is a great time to incorporate broccoli, asparagus, cauliflower and artichokes into your menu. 

  • Try to include meatless meals in your menu. Meat is one of the most expensive ingredients you can buy; if you go meatless once or twice per week, you'll spend less money on beef, chicken, turkey and other meats. 

  • Limit the number of meals that require expensive or hard-to-find ingredients. It's great to explore new cuisines, but if a dish calls for a $6 ingredient that you probably won't use again, it's not a budget-friendly dish. 

  • Don't be afraid to incorporate leftovers into some of your meals. For example, if you make roasted chicken on Wednesday, you can shred it and use it to make soup on Thursday. You'll get two meals, but you won't need to buy as much chicken. 

  • Bulk up your meals with beans or grains. If you don't have any health restrictions that would prevent you from eating beans or grains, stretch your meals by adding black beans, kidney beans, quinoa, rice and other ingredients. Adding beans and grains can help you get more servings out of the same meal without having to buy as much meat. 

Working Past 65

Why keep working?

Not everyone retires right at 65, and for good reason. If you don't have enough in your retirement savings plan, it makes sense to keep working for a few years. You'll be able to add more money to your retirement accounts and take advantage of compound interest so that your balance is even higher when you're finally ready to retire. 

Many people choose to keep working past 65 simply because they enjoy it. Working gives you a sense of purpose, helps you stay active and gives you opportunities to create fulfilling relationships. For some people, working even results in improved self-esteem. 

How does working affect Medicare enrollment?

If you decide to keep working once you turn 65, you need to be aware of how your decision will affect your Medicare enrollment.  

You typically have to enroll in Medicare within seven months of turning 65 (three months before your birth month, your birth month and three months after). However, you may be able to delay your enrollment if you're still working, but it depends on whether your employer has more than 20 employees or fewer than 20 employees. 

If you work for a small business that has fewer than 20 employees, your employer gets to decide whether you must enroll in Medicare once you turn 65.11 Once you enroll, Medicare becomes your primary insurance, and your employer's group plan is considered a secondary insurance. Therefore, Medicare pays most of your medical expenses, and your employer's plan only pays for services that aren't covered by Medicare, with one important caveat. If a service that isn't covered by Medicare isn't covered under the private plan, you'll have to pay for the service out of your own pocket. 

If you work for a business with more than 20 employees, you have three options: 

  • Stay on your employer's health plan and delay your Medicare enrollment without penalty. 
  • Enroll in Medicare and stop receiving coverage through your employer-sponsored health plan. 
  • Enroll in Medicare and keep the health plan offered by your employer. If you choose this option, your group health plan will be your primary insurance. Medicare will only pay for covered services that are not covered by the employer's plan.12 

How can working past 65 affect retirement planning and benefits?

Once you reach the age of 72, you'd typically take a required minimum distribution (RMD) from your tax-deferred retirement accounts. The RMD requirements apply to most 401(k) and 403(b) accounts, SEP IRAs, SIMPLE IRAs, Roth IRAs and rollover IRAs, which is an IRA that allows you to move (roll over) money from an employer-sponsored retirement account to an IRA.13 

If you decide to keep working, you'll still have to take the RMD from your IRA, but you may be able to avoid taking the RMD from your 401(k) or 403(b). To avoid taking the RMD, your employer-sponsored retirement account must be with your current employer. If your 401(k) or 403(b) is from a previous employer, you must still take the RMD. You're also prohibited from owning more than 5% of the company.14 

Provided you meet these requirements, you can avoid taking the RMD from your 401(k) or 403(b) until April 1 following the year you decide to retire.15 For example, if you retire on December 4, 2022, you'll have until April 1, 2023 to take the RMD.