5 steps for retirement planning

Whether you're a few decades or a few years away from retirement, having a plan can help you feel confident that you'll be ready when the time comes. Maybe you're considering taking advantage of financial advice to help with your retirement planning or maybe you feel confident handling it on your own. Whatever your situation, we've got a retirement planning checklist to help you prepare.

1. Figure out when you might have enough money to retire.
2. Learn about health care costs in retirement.
3. See how your retirement age affects your Social Security benefits.
4. Make a plan to pay off your debts.
5. Set up your savings to get you to your goal. 

1. Figure out when you might have enough money to retire

Deciding when you can retire isn't simple, but running some numbers can give you a good idea of where you stand. Think about how you want to live in retirement—your standard of living. Then look at your current spending. You'll probably want to spend 70%–85% of your current income. And where will your income come from? Likely sources include your savings, investments from your IRA or 401(k) plan, and Social Security.

Check out our retirement income calculator to assess your situation and map out different paths to reach your target.

2. Consider your expenses, including medical care

You should expect to spend 70%–85% of your pre-retirement income in retirement.* Most of your day-to-day expenses will be about the same as they are now, but you'll need to factor in the cost of your medical care. Health care in retirement is a concern for most of us because as we age, we tend to spend more money on medical expenses.

And while you can control some aspects of your medical expenses in retirement, there are other things that are out of your control. You'll have some control over your health status, the age you retire, the Medicare plans you choose, and your income. One thing outside of your control is the amount of your health care expenses your employer does or doesn't subsidize.

3. See how your retirement age affects your Social Security benefits

You can start collecting Social Security payments at age 62, but that's not the whole story. To maximize your benefits, you should have a strategy to determine when it's best to begin taking payments.

Lots of things can affect your benefits, including your marital status, whether you plan to continue working in retirement, and if you receive a government pension. But one thing is true for everyone: The longer you wait to start collecting Social Security benefits, the more you'll receive.

4. Make a plan to pay off your debts

If you want to retire before paying off all your debts—mortgage, student loans, credit cards, etc.—that's okay. But be sure to prioritize paying your higher interest rate debts—personal loans, credit cards, and auto loans—first because they can eat into your savings and reduce your standard of living.

You should also consider paying off any student loans you or your children have. Up to 15% of your Social Security benefits could be garnished if you fall behind on student loan payments.

No matter what outstanding debts you have as you approach retirement, be sure you understand the implications and have a plan to pay down your debt.

5.Set up your savings to get you to your goal

As you get closer to retiring, make sure you're doing everything you can to set yourself up for success. Take advantage of investing in your IRA and 401(k) plan, and make sure your investment allocation still aligns with your goal.

If you're age 50 or older, consider making catch-up contributions as well. The closer you are to retirement, the more important it is to make sure your savings are working as hard as possible for you.