20 Steps to Take When Preparing for Retirement

Laveta Brigham

Preparing for retirement doesn’t have to be difficult or complex. Even if you don’t have a detailed plan for retirement in place, taking small steps now can make a big difference as you approach retirement. © (Getty Images) Senior couple in living room Here is how to prepare for retirement: […]

Preparing for retirement doesn’t have to be difficult or complex. Even if you don’t have a detailed plan for retirement in place, taking small steps now can make a big difference as you approach retirement.

a baby sitting in a room: Senior couple in living room

© (Getty Images)
Senior couple in living room

Here is how to prepare for retirement:


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  1. Shake off financial fear.
  2. Make a quick start.
  3. Choose a debt to pay off.
  4. Contribute to a 401(k) plan.
  5. Check the employer match for a 401(k) plan.
  6. Use the auto-escalation feature.
  7. Find three things to look forward to in retirement.
  8. Calculate your net worth.
  9. Grow your net worth.
  10. Think about working longer.
  11. Consider retirement side jobs.
  12. Create a Social Security account.
  13. Download an app.
  14. Read a money book.
  15. Set up a will.
  16. Research financial advisors.
  17. Make planning a habit.
  18. Talk to retirees.
  19. Start an IRA.
  20. Follow a financial blog.

1. Shake Off Financial Fear

Instead of avoiding money-related tasks, commit to facing your financial reality. Take a close look at your monthly expenses and compare them to the income you regularly bring in. Understanding your full financial picture can help you determine how much to put toward retirement regularly.

2. Make a Quick Start

Decide on a certain amount to save each month, such as $50 from each paycheck. Put money aside before you spend it on bills, groceries or online shopping.

3. Choose a Debt to Pay Off

If you have a credit card balance or car loan, look at the amount you owe. Then create a plan to pay off the debt, such as putting an extra $100 toward the outstanding balance each month until the balance is zero.

4. Contribute to a 401(k) Plan

If your employer offers a 401(k) plan, you can ask to have funds automatically taken from your paycheck and placed into the account. You’ll save without having to think about it each month.

5. Check the Employer Match for a 401(k) Plan

Certain companies offer to match a portion of the funds you contribute to a 401(k) plan each year. Ask if a match is available, and then make sure your contribution rate is enough to capture the free funds.

6. Use the Auto-Escalation Feature

Some retirement plans offer an auto-escalate option that will boost the amount you save for retirement over time. “This will automatically increase the contribution to a 401(k) plan by a minimum of 1% on an annual basis,” says Brian Carney, the co-founder of RiversEdge Advisors in Wilmington, Delaware.

7. Find Three Things to Look Forward to in Retirement

Envisioning a few activities you’re excited about doing in retirement can help motivate you to set up your finances to make them happen. “If you have a positive vision of your future self, behavioral finance tells us that taking those next important savings baby steps will only get easier,” says Paul Tyler, chief marketing officer at Nassau Financial Group in Hartford, Connecticut.

8. Calculate Your Net Worth

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Add up everything you own, including your house, car, cash and investments. Then subtract all that you owe, such as your mortgage, other loans and outstanding debt. The result will be your net worth, which can help you understand where you stand financially. Online calculators make it easy to calculate your net worth.

9. Grow Your Net Worth

Once you know your net worth, you can think about ways to increase it. You might make one small change, such as setting aside more in savings each month, to boost your wealth.

10. Think About Working Longer

If you’re close to retirement, consider the difference that staying employed and bringing in income for another year could make. You might be able to save more or pay off your mortgage, which could lead to more available funds in retirement.

11. Consider Retirement Side Jobs

In addition to saving, you may be interested in working part-time to increase your retirement income and stay active. If you want to be at home, search for online jobs so you don’t have to travel or commute.

12. Create a Social Security Account

You can set up a my Social Security online account at the Social Security Administration website. “From there, you can learn how much your Social Security benefits will amount to once you are able to claim,” says Jeff Gove, president of investments at Stonebridge Insurance and Wealth Management in Kearney, Nebraska. “This is a helpful tool for those who are planning for retirement and want to know how much income they can count on.”

13. Download an App

There are many free financial apps that can help you pay off debt, track your spending or increase your savings. Search for an app that aligns with your current goals, and then use it consistently. You’ll grow in your knowledge of money and how it can be used to plan for the future.

14. Read a Money Book

Increasing your financial knowledge may make it easier to keep your personal finances on track. Pick up a book about investing and discuss it with your household to see what lessons can be applied to your budget.

15. Set Up a Will

If you don’t already have one, some websites make it easy to create a will online for free. The process can sometimes take only a few minutes. You’ll gain peace of mind about passing assets on to your loved ones in a streamlined way.

16. Research Financial Advisors

If you don’t have a financial planner, look for someone in your area or online who can help you think about retirement and plan ahead. Ask for recommendations and read reviews before selecting a financial professional.

17. Make Planning a Habit

Set aside time regularly to go over your budget, long-term savings and other money matters. “Commit to spending one hour every week on your personal finances,” says Carrie Friedberg, founder of SF Money Coach in Palo Alto, California. “Once you retire, you will already be in a routine of paying attention to your money and can easily make adjustments to your monthly and annual spending plans as needed.”

18. Talk to Retirees

Talk to individuals who have retired, and ask them to share their secrets. You may learn a few strategies to put into place that can help you make your retirement goals become a reality.

19. Start an IRA

During 2021, you can put up to $6,000 in a traditional individual retirement account or a Roth IRA. If you’re age 50 or older, the contribution limit is $7,000. You can set up an IRA through your bank or another financial institution.

20. Follow a Financial Blog

If you’re near retirement, want to retire early or are looking for money tips, consider regularly visiting a financial website with frequent updates to continue learning. You may be able to subscribe to a newsletter that will provide news and advice about personal finance topics.

Copyright 2021 U.S. News & World Report

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