(844) 786-8229 info@quotacy.com
two beach chairs on the ocean sand

Preparing for Retirement: 11 Steps to Secure Your Future

August 10, 2023
Our goal is to educate and advise on life insurance options, so you can feel confident in making the right choice, whether that’s through Quotacy or somewhere else. To ensure we provide accurate and trustworthy information, our writers follow strict editorial standards.

Preparing for retirement has become more challenging in today’s world compared to the past. For example, in the 1940s, retirees were expected to live for approximately 13 more years after retirement. Their Social Security benefits, pensions, and savings easily support them through those years.

Today, retirees can expect to live at least 20 more years after retiring. Pensions have become increasingly rare, and even Social Security needs continuous government intervention to prevent its depletion.

Review the steps in this guide to help ensure your retirement planning is on track.

11 Essential Steps to Financially Prepare for Retirement

With the proper roadmap, getting ready for retirement is manageable. We’ve broken down the process into 11 essential steps.

Set Clear Goals

Before planning for retirement, take a moment to dream. Imagine your ideal retirement – is it filled with adventure, relaxation, family time, or giving back to the community?

Knowing what you want to achieve is the cornerstone of effective retirement planning. Setting clear goals gives you direction and helps you pinpoint how much money you’ll need to fulfill your dreams.

These are some common retirement goals:

  • Travel
  • Shop
  • Enjoy summer and winter homes
  • Enjoy time with family and friends
  • Volunteer
  • Take up leisure hobbies like gardening or golf
  • Work part-time
  • Move closer to family
  • Move to a retirement community

Some goals, such as volunteering or spending time with loved ones, may be inexpensive or even free. Others, like traveling or maintaining multiple homes, can come with a hefty price tag. This is why defining your goals is the first step in retirement planning.

Calculate Your Retirement Needs

Calculating your retirement needs is essential in ensuring a financially secure and fulfilling retirement. Financial planners often recommend aiming for a retirement income that’s around 70-80% of your pre-retirement income. However, if you envision an active lifestyle with lavish pursuits, you should aim closer to 100%.

Two primary factors to consider are your desired retirement lifestyle and the ever-changing economic landscape. Remember that living and healthcare expenses will likely rise, and life expectancies are increasing.

If you’re nearing retirement, you can make more precise estimations.


If Tim, who is 63 and earns $100,000, wants to retire at 67 with 80% of his pre-retirement income, he’ll need an annual income of $80,000.

To sustain this lifestyle for a 20-year retirement period, Tim will need to have saved over $1.6 million.

If you’re more than a decade away from retirement, calculations are trickier due to salary increases and other variables.


Alexandria is 45 and currently earns $60,000 annually. She expects to receive a 3% raise every year. Therefore, her annual salary at retirement is approximately $114,000.

Her target retirement income is $91,200 (80% x $114,000). However, Alexandria needs to review these numbers yearly and recalculate them as necessary.

h Note: These examples don’t account for inflation, which is vital to calculate because it impacts your purchasing power. With inflation, a dollar buys less over time, potentially leading to higher future living costs. If retirement savings don’t adjust for inflation, they may fall short of maintaining the desired lifestyle in retirement.

Besides planning for your goals, it’s essential to calculate daily living expenses such as food, clothing, and transportation. Additionally, even if you’ve paid off your mortgage, housing expenses like utilities, insurance, taxes, and maintenance will continue.

Moreover, retirement may bring new expenses. For example, will you hire services for lawn mowing or snow removal? If you own multiple properties, who will manage them in your absence?

Typical Expenses in Retirement
Increasing CostsSteady CostsDecreasing Costs
  • Medical costs
  • Hobbies and leisure activities
  • Travel
  • Home maintenance and modifications
  • Gifts and financial help for family
  • Groceries and cleaning supplies
  • Personal items like toiletries
  • Insurance premiums
  • Utilities
  • Property taxes
  • Transportation
  • Clothing and dry cleaning
  • Work-related expenses
  • Lunches and eating out
  • Contributions to retirement accounts

Accounting for these and other unforeseen expenses is critical in accurately calculating your retirement needs.

Maximize Your Employer’s Retirement Benefits

Many employers offer 401(k) retirement plans. These plans allow you to contribute a part of your salary before it’s taxed, effectively reducing your current taxable income.

Since pension plans have become rare, many employers offer to match a certain percentage of an employee’s contributions to individual retirement accounts, such as 401(k)s. Take advantage of this benefit and ensure you contribute at least enough to meet your employer’s match.


Let’s say your employer offers to match 100% of your 401(k) contributions up to 5% of your annual income.

Imagine you earn $50,000 per year. In this scenario, 5% of your annual income is $2,500 ($50,000 x 5%). Your employer would add $2,500 to your 401(k) each year, but only if you contribute at least that amount.

If you only add $2,000, your employer matches that amount.

Contributing less than the maximum employer match is the equivalent of leaving “free money” on the table. Once you match your employer’s contributions, you can funnel more money into your 401(k) or contribute to other retirement accounts.

Note: In 2023, employees can contribute up to $22,500 annually to their 401(k).

Explore Retirement Savings Options

Apart from employment-based retirement plans, Individual Retirement Accounts (IRAs) offer tax advantages to help you save for retirement. Two common types are Traditional IRAs and Roth IRAs.

  • Traditional IRAs: Contributions to Traditional IRAs may be tax deductible, depending on your income and whether a retirement plan at work covers you. The investments grow tax-deferred, meaning you won’t pay taxes on the gains if you wait to withdraw until retirement. At that time, the withdrawals are taxed as ordinary income.
  • Roth IRAs: Roth IRAs are funded with after-tax dollars, meaning you pay taxes on the money before it goes into the account. However, the investments grow tax-free, and qualified withdrawals during retirement are also tax-free. This can be advantageous if you expect to be in a higher tax bracket in retirement.


Comparing Traditional vs Roth IRA
Traditional IRARoth IRA
  • Contributions are often tax-deductible.
  • Withdrawals are taxed as ordinary income.
  • Nearly anyone with an earned income can contribute.
  • You’re required to start withdrawing money at age 72.
  • Contributions are made with after-tax dollars.
  • Qualified withdrawals are tax-free.
  • Contribution ability is limited by income level.
  • You can leave money in the account to accumulate as long as you want.

Most investment companies that manage retirement accounts provide calculators and projection tools.

These tools can help estimate your monthly retirement income based on your contributions and investment selections. Using them to review and adjust your retirement savings strategy periodically is a good practice.

In addition to 401(k)s and IRAs, consider looking into other investment options such as brokerage accounts, annuities, or real estate investments to diversify your retirement savings.

Investment Strategies for Retirement

Different types of investments have varying ranges of risk, liquidity, and potential growth, impacting the performance and accessibility of your retirement savings.

Investment Type




Savings Accounts & CDs

Very Low

High (Savings) / Low (CDs)

Very Low


Low to High (Varies)


Low to Moderate


High (Varies)


Potentially High

Real Estate

Moderate to High


Potentially High

Mutual Funds & EFTs


High (ETFs) / Moderate (Mutual Funds)


Commodities (e.g., gold, oil)





Very High


Potentially High but Highly Speculative

Keep these factors in mind when developing your investment strategy:

  • Risk tolerance: Determine your risk tolerance and investment time horizon. Typically, the younger you are, the more risk you might be willing to take since you have a longer time horizon to recover from market downturns.
  • Diversification: Diversify your investments among asset classes such as stocks, bonds, and real estate. This helps spread risk as different investments perform differently over time.
  • Rebalancing and shifting: As you approach retirement, gradually move your investment portfolio towards more conservative assets to protect against market volatility. Regularly rebalance your portfolio to maintain your desired asset allocation.
  • Cost considerations: Pay attention to the fees associated with different investment options. Lower-cost index funds or ETFs can be more cost-effective than actively managed funds.

Remember that investing always carries risk. Consult a financial advisor to help develop a customized investment strategy that aligns with your retirement goals and risk tolerance.

Create a Retirement Budget

As you near retirement, start thinking through your new budget.

A retiree’s budget may include costs such as:

  • Regular living expenses: Account for essentials such as groceries, utilities, and housing.
  • Healthcare: Anticipate healthcare costs, including insurance premiums, medications, and possible long-term care.
  • Leisure activities: Allocate funds for hobbies, travel, and entertainment. This is the time to enjoy the fruits of years of labor, but it’s essential to do so within your financial means.
  • Unexpected expenses: Set aside an emergency fund for unforeseen expenses such as home repairs or medical emergencies.
  • Gifts and support: If you plan to support family members financially or donate to causes, include these in your budget.

Review and update your budget periodically. As retirement progresses, your needs and spending patterns may change.

Manage & Pay Down Debts

It’s highly beneficial to enter retirement with as little debt as possible. It can be a significant burden when you are on a fixed income, and leaving debt behind when you pass away can negatively impact your loved ones.

Here are steps to manage and pay down debts:

  • Prioritize high-interest debts: Focus on paying off debts with higher interest rates, such as credit card debts.
  • Consider refinancing options: You may be able to refinance your mortgage or other loans for a lower interest rate.
  • Create a payoff plan: Document a strategy to reduce your debts before retiring.
  • Avoid taking on new debt: Be cautious about taking on any new debt as you near retirement, especially for non-essential items.

Plan for Healthcare in Retirement

Long-term care is expensive, and the costs continue to rise. You may incur significant expenses if you need this type of care at some point. It’s not unusual for unplanned long-term care costs to wipe out retirement savings.

It’s critical to consider now how you’ll pay for care later. Learn about long-term care costs and your options for covering those bills.

Make Sure Your Life Insurance Is Adequate

Beyond the death benefit, certain life insurance options offer flexibility and financial support during your retirement years. For example, life insurance can help with long-term care costs.

Life Insurance with a Long-Term Care Rider

A long-term care rider is an optional coverage add-on that allows you to use all or a portion of the policy’s death benefit for qualified long-term care expenses.


  • Helps cover long-term care costs.
  • Reduces the financial burden on your family for care expenses.
  • Can help maintain independence by funding in-home care.
  • If the LTC rider is not used, the full death benefit will be paid to your beneficiaries.

Hybrid Insurance Policy

Like a life insurance policy with an add-on long-term care rider, there is a hybrid product that combines life and long-term care insurance. However, these products emphasize the long-term care feature more than the death benefit.


  • May offer immediate payout for qualified LTC expenses.
  • Can be easier to purchase, sometimes requiring fewer medical exams compared to a life insurance policy with an LTC rider.
  • The policy includes a death benefit, though it’s usually smaller than a standalone life insurance policy.

Besides long-term care, another aspect to consider is how life insurance can enhance your retirement income. Permanent policies often include a cash value component that can grow over time and offer tax advantages.

Types of life insurance that include cash value growth:

The cash value within these policies grows tax-free, and there is no penalty for withdrawing funds before a certain age. You can access this money through policy loans or withdrawals, providing supplemental income in retirement.

However, it’s essential to understand the specifics of your policy, as surrendering or withdrawing too much can impact the death benefit or incur taxes.

See what you’d pay for life insurance

Comparison shop prices on custom coverage amounts from the nation’s top carriers with Quotacy.

​Social Security & Pension Considerations

Every worker pays into Social Security in hopes of being able to rely on this income in retirement.

  • Eligibility: If you’re 62 or older and have worked and paid SS taxes for at least 10 years, you’re eligible for Social Security retirement benefits.
  • Marital status: If you’re married, widowed, or divorced, you may have additional options for claiming Social Security based on your spouse’s work record.
  • Claiming age: You can start claiming Social Security benefits at 62. However, the longer you wait (up until age 70), the more you will get. For example, claiming at 62 may reduce your benefits by as much as 30% compared to claiming at your full retirement age (which varies depending on your birth year).

Using the mySSA calculator at www.SSA.gov, you can see a personalized estimate of your future monthly retirement benefits. You can use this number as a starting point to determine how much you will need from other money sources to fill in the gap and reach your ideal retirement income.

If you’re fortunate enough to have a pension plan through your employer, here are some things to consider:

  • Type of plan: Understand whether you have a defined benefit plan, which pays a fixed amount regularly, or a defined contribution plan, where you and possibly your employer contribute to a retirement account.
  • Payout options: Some pension plans offer various payout options, such as lump sum, single life annuity (payments for the rest of your life), or joint-and-survivor annuity (ongoing payments that continue to a spouse after your death). Evaluate which option aligns best with your financial needs and family situation.
  • Inflation: Consider that fixed pension payments might not keep up with inflation. Think about strategies to offset the potential decrease in purchasing power over time.
  • Pension and Social Security interactions: In some cases, having a pension might reduce the amount of Social Security benefits you’re eligible for, particularly if you didn’t pay Social Security taxes on the earnings from which your pension is based.

Find the Right Time to Retire

Deciding when to retire is a big decision. While there is a stated “full retirement age,” you’re not required to retire at this exact age. Some people retire early, and some work longer.

Consider the points below when deciding the best time for you to retire:

  • Your financial situation: It’s vital to ensure that your retirement savings and investments are sufficient to maintain your lifestyle.
  • Your Social Security benefits: The age at which you start claiming Social Security benefits will affect the monthly amount you receive. Waiting until full retirement age or longer can increase these benefits. Claiming early will reduce your benefits.
  • Your health: Healthcare can be a significant expense in retirement, especially if you retire before you are eligible for Medicare. It’s necessary to consider your health and plan to cover healthcare costs.
  • Your debts and liabilities: If you’re married or in a long-term partnership, discussing retirement plans and goals is critical, ensuring your expectations and financial objectives are aligned.
  • Market conditions: The economy and financial markets can impact investments and retirement savings. If market conditions are unfavorable, it might be worth waiting if you can.
  • Your emotions: Retirement is a profound life transition. Be sure you feel emotionally ready to leave your career and change your daily routine.

The sooner you start planning for retirement, the better. Talk with a financial advisor to make a retirement plan specific to your goals.

Retirement Planning FAQs

Retirement preparation can be daunting. Here are some quick answers to common questions.

How Much Should I Save for Retirement?

The amount you should save for retirement varies based on your desired lifestyle, income sources, expenses, and expected retirement age, among other factors.

A common rule of thumb is the 4% rule, which suggests saving enough to withdraw 4% of your retirement portfolio each year to cover your expenses. For example, if you need $40,000 a year from your savings, you should aim for a retirement portfolio of $1 million.

How Can I Estimate My Social Security Benefits?

You can estimate your Social Security benefits by creating an account on the Social Security Administration’s website, www.SSA.gov, and using the mySSA calculator. This tool provides personalized estimates based on your earnings record.

Remember that the age at which you start claiming benefits affects the amount; delaying until full retirement age or later can increase your monthly benefits.

Can I Continue Working After Retirement?

You can continue working after retirement, but it may impact your Social Security benefits. Learn more at www.SSA.gov.

What Are the Key Healthcare Considerations for Retirement?

Healthcare costs can be a significant expense in retirement. Medicare becomes available at age 65, but you’ll need to secure other health insurance if you retire earlier.

Additionally, Medicare doesn’t cover everything, so many retirees opt for supplemental insurance. Estimating healthcare expenses, considering long-term care needs, and evaluating insurance options as part of your retirement planning are important.

Should I Pay All My Debts Before Retiring?

Ideally, entering retirement with little to no debt will provide more financial freedom. However, it’s not always feasible.

Evaluate your debts and prioritize paying high-interest debts, like credit cards.

Mortgage or low-interest loans might not need to be paid off entirely if you have a solid financial plan, but reducing liabilities before retirement can help reduce financial stress.

Find More Expert Advice in Quotacy’s Blog

Remember that long-term growth is more important than short-term gains when planning for retirement. The longer you let invested money go untouched, the greater it accumulates due to compounding interest. Before retiring, only touch your funds designated for retirement if it’s an emergency.

Estate planning is an integral component that should be considered alongside retirement planning. Our comprehensive Estate Planning Guide can help you through the essential steps of creating a personalized plan that caters to your unique needs.

Find more information about retirement, financial and estate planning, and life insurance in our blog.

This article is for general educational purposes only and is not written by a financial advisor.


1 Comment

  1. Dyan Mcgreggor

    What could be the possible reason for retirement claims not being paid after retirement


Submit a Comment

Your email address will not be published. Required fields are marked *