Retirement Planning

A Retirement Checklist by Life Stage

February 6, 2019
How to prepare for retirement in ways specific to your current age.

Key Points

  • When prioritizing your saving goals, retirement likely should come first.
  • How much you set aside and how long you save have the most impact on your ability to achieve long-term goals.
  • It’s critical to maintain appropriate equity exposure for your age.

In Your 20s and 30s

You may be actively managing your finances while looking for some direction on how to allocate your assets. Following some basic tips can help you to establish a solid foundation for your retirement savings.

  • Make sure you’re tracking your expenses, and develop a budget that allows you to meet your savings goal.
  • We recommend contributing 15% to retirement accounts (including any employer matching contributions).
  • Balance your other financial priorities, such as paying down debt, with saving for your retirement.
  • If you can’t hit the 15% retirement savings target right now, start with at least 6% (10% is better!) and work your way there with 2% annual increases. Use your workplace plan’s auto-increase option, if offered.
  • Consider maintaining a high exposure to equities (90% or more) in your retirement account. With decades to retirement, you can take full advantage of equities’ growth potential.

In Your 40s and 50s

You may be facing competing financial priorities, such as saving for emergencies or paying for your children’s college expenses. But it’s important to keep your retirement investing as a priority.

  • Use the auto-increase feature in your workplace plan if you have access to one.
  • If you're not saving 15%, increase the amount you are saving by 2% per year.
  • Consider maintaining a high exposure to equities (60% to 100%). Even when you are 11 to 15 years from retiring, you should still have 80% of your portfolio allocated to equities.
  • Don’t forget about managing savings you may have in old workplace savings plans.
  • Take advantage of retirement account catch-up contributions in the year you turn age 50. You can contribute up to $6,000 more annually to your workplace plan ($25,000 total in 2019) and $1,000 more annually to your IRA ($7,000 total in 2019).

In Your 60s and Up

Retirement is within your sights. In this phase, you are either gearing up for it in the next decade or finalizing plans to make the transition.

  • Consider setting aside more than 15% of your income, including any company match, and if you’ve fallen a bit behind with your savings, take advantage of catch-up contributions for IRAs and workplace plans, if needed. If you are or plan to be self-employed, look into contributing to an Individual (Solo) 401(k), a SEP-IRA, or a SIMPLE IRA.
  • Consider a balanced approach to asset allocation, maintaining appropriate exposure to equities for sufficient growth potential in your portfolio (50% to 65%, gradually decreasing as you move into and through retirement) and fixed income and cash investments to dampen volatility.
  • Don’t forget about managing savings you may have in old workplace savings plans.
  • Think about your sources of retirement income, including Social Security benefits, income from a pension, and even part-time work. Then consider how much you will need to maintain a comfortable standard of living—a flexible initial 4% withdrawal guideline offers a way to balance your need for income in retirement with your desire not to outlive your assets.

This material has been prepared by T. Rowe Price for general and educational purposes only. This material does not provide fiduciary recommendations concerning investments, nor is it intended to serve as the primary basis for investment decision-making. T. Rowe Price, its affiliates, and its associates do not provide legal or tax advice. Any tax-related discussion contained in this material, including any attachments/links, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or professional tax advisor regarding any legal or tax issues raised in this material.

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