Retirement Planning Strategies: Building Your Financial Future Today
Planning for retirement requires a thoughtful approach and consistent action. The decisions you make today can dramatically impact your financial security in your later years. Understanding available strategies can help you create a retirement plan that meets your needs.
Start Early and Be Consistent
The power of compound interest makes time your greatest ally in retirement planning. Starting in your 20s or 30s gives your money decades to grow.
“The biggest mistake I see people make is waiting too long to start saving,” says Rafe Klein, Senior Vice President, Investments, David Lerner Associates. “Even small contributions can grow into substantial sums when given enough time. The key is consistency and patience.”
Maximize Retirement Account Contributions
Take full advantage of tax-advantaged retirement accounts:
401(k) or 403(b) Plans
These employer-sponsored plans offer several benefits:
- Tax-deferred growth
- Potential employer matching contributions
- Higher contribution limits ($23,500 in 2025)
- Additional $7,500 catch-up contributions for those 50+
- A higher catch-up contribution limit applies for employees between the ages of 60 and 63 for these plans. For 2025 the catch-up contribution limit is significantly increased to $11,250 instead of $7,500.
At minimum, contribute enough to capture your full employer match if they offer it. Consult with your employer.
Individual Retirement Accounts (IRAs)
IRAs provide options based on your tax situation:
- Traditional IRAs offer tax-deductible contributions and tax-deferred growth
- Roth IRAs use after-tax dollars but provide tax-free withdrawals in retirement
Self-Employed Options
Business owners have additional options:
- SEP IRAs
- SIMPLE IRAs
- Self directed 401(k) plans
These plans allow for higher contribution limits than standard IRAs.
Create a Diversified Investment Strategy
Your retirement portfolio should reflect your time horizon and risk tolerance:
Asset Allocation
Diversify investments as you age and get closer to retirement. Consult with your investment counselor regularly to stay on track.
Consider Target-Date Funds
These funds automatically adjust your asset allocation as you near retirement, becoming more conservative over time. They offer a simple “set it and forget it” approach.
Plan for Healthcare Costs
Healthcare expenses represent a major retirement expense. Strategies to prepare include:
Health Savings Accounts (HSAs)
If you have a high-deductible health plan, HSAs offer triple tax advantages:
- Tax-deductible contributions
- Tax-free growth
- Tax-free withdrawals for qualified medical expenses
Unlike flexible spending accounts, HSA funds roll over year to year.
Long-Term Care Planning
More than 50 percent of people over 65 will need long-term care. Some studies show as high as 70 percent of the population will require some form of long-term care. Options include:
- Long-term care insurance
- Hybrid life insurance policies with long-term care benefits
- Self-funding through dedicated savings accounts
Create Multiple Income Streams
Relying solely on Social Security is risky. Build various income sources:
- Social Security benefits
- Employer pensions (if available)
- Retirement account withdrawals
- Part-time work
- Rental income
- Dividend-paying investments
- Annuities for guaranteed income
Regularly Review Your Plan
Your retirement plan needs regular check-ups:
- Assess progress toward goals
- Rebalance investments to maintain target allocation
- Adjust contributions as income and lifestyle changes
- Update beneficiary designations after life events
Starting early, maximizing tax-advantaged accounts, diversifying investments, and creating multiple income streams form the foundation of a solid retirement strategy. By taking consistent action and periodically reviewing your progress, you can work toward a financially secure retirement.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.