What is Retirement Planning?

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  • Written By: J. Beam
  • Edited By: Niki Foster
  • Last Modified Date: 16 October 2019
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Retirement planning is the important task of deciding how you will live once you retire. It involves the consideration of a number of factors, including at what age you hope to retire, how much money you will need to cover living expenses coupled with the things you plan to do once you've retired, and where your money will come from. Generally speaking, retirement planning is planning your finances for the period of life after you stop working.

Each person's situation is unique, and therefore, retirement planning isn't one standard plan for every person. Saving money for retirement through one or all of the available options is the first place to start. Many employers have retirement planning options available to their employees. Some companies have pension plans, others have 401(k) plans, and some have a combination of both. There are different types of pension and 401(k) plans, and you should check with your company's human resource department for information specific to you.

Even without company sponsored plans, retirement planning is possible for any individual who wisely invests his or her money. You can choose to talk to a financial planner, but usually for a fee. Another option is to discuss investment and savings options with the bank where you currently have your checking or savings account. Many banks offer free advice to their account holders hoping to gain more of their business through long-term savings.


Retirement planning involves more than just saving money. It's important to determine as closely as possible what your potential expenses and compare them to your potential income. For instance, if you will be able to pay your mortgage off before retiring, that is one less expense you'll need to cover. It may be necessary to find a way to pay an extra small amount towards your mortgage while working in order to have that debt absolved before retirement, thereby lowering the amount of money you will need each month.

Depending on what age you hope to be when you retire, retirement planning should also involve tax planning. By doing a little research and talking to financial professionals, you should be able to come up with a savings and investment plan that works for you. You can begin retirement planning at any stage in life, though earlier is better. Be prepared to make changes in your plan as your life changes, and when you finally reach retirement, the planning you've done will leave you better prepared to relax knowing your finances are taken care of.


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Post 5

Moldova- I think that is good information, but sometimes individual retirement plans can seem daunting because of all of the investment vehicles and financial consideration.

I think if you are still unsure of how to save for retirement it is best to seek personal retirement planning help from financial gurus like Suze Orman and Dave Ramsey. Their books are usually best sellers for a reason. They provide sound investment advice without the use of financial jargon.

Post 4

Sunshine31- I agree. I also love Vanguard funds. I wanted to add that another account to consider is the Roth IRA or the Traditional IRA (indvidual retirement account).

The Roth IRA grows tax free but the initial contributions are taxed. It also has income limits of $125,000 per year for married couples. So any married couple with higher earnings may not participate in this account.

The Traditional IRA grows tax deferred so taxes are paid upon withdrawal. There is no income restrictions like the Roth IRA has, and both accounts allow a maximum yearly contribution of $5,000 for investors under 50.

For investors 50 and over the maximum contribution amount goes up to $6,000 per year.

Post 3

I agree with you. Morningstar is a great site. I just wanted to say that many fund families like Vanguard offers retirement planning help on their site.

They provide a risk analyizer that helps you determine the level of risk you would feel most comfortable with. Vanguard really helps with online retirement planning.

For example, Vanguard is well regarded in the financial world as having the lowest fees among mutual fund companies. They offer many index funds that have fees of just .18%.

This is an important factor to consider with retirement planning because you do want to keep as much of your money as possible.

Post 2

Motherteresa- I agree with you. The younger you start saving for retirement the better. A great way to start saving for retirement is to begin to invest in a your companies 401K retirement plan.

Most companies even provide a match from three to six percent of your first three to six percent contribution. This is free money that you can not afford to lose.

Most 401k plans offer a few mutual funds, bonds, and some cash options. In order to really determine the best mix of the available funds in the 401K, you should look at the site called Morningstar.

It rates all securities and offers information regarding the fees, management of the security as well as the famous star rating. This will make it easier to narrow down your choices and puts you on the road toward the best retirement plan.

Post 1

It is important to start saving as early in life as possible. The later one starts the less money is accumulated even if saving twice as much money. At first money grows slower, but given time the return on the saving becomes steeper.

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