Knowing how to prepare for retirement starts with a clear plan. You need to think about how you want to live and what kind of future you see for yourself.

Retirement is not just about saving money. It’s about building a life you enjoy without work being the center of it.

This guide walks you through every step. From choosing your ideal lifestyle and mapping your income to making the most of Social Security and smart investing.

1. Start with Retirement Lifestyle Planning

Retirement lifestyle planning starts with imagining your day-to-day life without work. Think about what brings you joy and what you want to do with your time.

Do you see yourself near the beach or in the mountains? Will you travel, volunteer, or maybe start a small business? These choices shape your spending needs.

Where you live impacts taxes, healthcare, and housing costs. What you do affects your budget. That’s why it’s important to match your financial plans with how you want to live.

How to prepare for retirement begins with understanding the life you want after work. Then, you can shape your saving and spending plans to support that vision. Retirement lifestyle planning and your choices can influence your financial future.

2. Evaluate Income Sources: The Foundation of Retirement Income Planning

Retirement income planning means figuring out how you’ll pay for life after your paycheck stops. You’ll need to map out what money will come in and when.

Common income sources include:

• 401ks
• traditional and Roth IRAs
• pensions
• annuities
• savings accounts
• investment accounts
  

Estimate your future expenses and match them with these streams.

Don’t forget to account for inflation, rising healthcare costs, and the unexpected. These can eat into your income over time.

Good retirement lifestyle planning looks beyond just saving. It builds a plan that supports how you want to live. Want to factor in a pension? Here’s how.

3. Review Social Security Planning Strategies

Social Security planning plays a big role in your overall retirement income planning. It’s one of the few income sources that adjusts over time to help you keep up with inflation. Each year, benefits may increase based on a cost of living adjustment. This helps you maintain purchasing power in retirement.

When to claim your benefits is a key decision. You can start as early as age 62, wait until your full retirement age, or delay up to 70. The longer you wait, the higher your monthly benefit. That only pays off if you live long enough to make up for the delay.

Your choice should depend on several factors:

• your health
• how long you expect to live
• your other income sources
• how much you’ll pay in taxes

For example, retirees in some states may benefit from a lower tax burden. Planning to retire in Arizona? This guide to state taxes shows how it affects your Social Security income.

Review your options early and consider how Social Security fits into your full income plan.

4. Choose Smart Asset Allocation for Retirement

Asset allocation for retirement means spreading your money across different types of investments: stocks, bonds, and cash. The goal is to balance growth with safety, especially as you get closer to retirement.

Early in your career, you might take more risks to grow your savings. But as retirement nears, protecting your money becomes more important. That’s when many shift to more conservative investments, like bonds or cash reserves.

One common strategy is the bucket approach. You divide your money into three buckets:

• Short-term (1–2 years): Cash or money market accounts for living expenses.
• Medium-term (3–10 years): Bonds or conservative investments.
• Long-term (10+ years): Stocks or growth assets for future income.

This helps manage risk and ensures you don’t sell long-term investments during market downturns just to pay bills. It also keeps your income steady.

Preparing for retirement includes making sure your money is both growing and protected. Make time to rebalance your portfolio once or twice a year. Markets move, and your goals might change, too.

5. Don’t Miss Catch Up Contributions

Once you turn 50, catch up contributions can boost your retirement savings. These allow you save more if you started late or had a few off years.

The higher limits give you the chance to make up for lost time. The extra savings can cover future health expenses, inflation, or long-term care needs. It's helpful if you started late or paused saving during your career.

It’s one more smart way to think about how to prepare for retirement, especially if you’re behind.

Additional Tips on How to Prepare for Retirement

Working with a financial advisor aligns your retirement goals with your financial reality. They can guide you through tax planning, estate considerations, and long-term care strategies. Stay informed about tax laws and benefit changes. The SECURE 2.0 Act introduced significant shifts in retirement planning.

Estate planning distributes your assets according to your wishes. Long-term care insurance can protect your savings from unexpected health expenses. Consider phased retirement or part-time work to ease the transition and maintain income.

Key Questions to Discuss with Your Advisor:

If you’re unsure where to start, here are key questions for your retirement planner:

• What income sources will support my retirement lifestyle?
• How can I cut taxes on my retirement income?
• What strategies can help my savings last throughout retirement?
• How should I plan for potential healthcare and long-term care costs?
• What estate planning steps should I take to protect my legacy?

Ready to Take the Next Step?

Planning for retirement isn’t just about numbers. It’s about seeing the big picture. This is how your lifestyle, income sources, and long-term needs all fit together.

You need a plan that covers how you want to live, how much income you’ll need, and how your savings will support it over time.

Each piece affects the others. That’s why reviewing your full financial picture matters.

Get a free portfolio review and see how your strategy measures up.

Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD # 175083.

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