Retirement Planning 101: Start Today, Retire Comfortably

The best time to start retirement planning was yesterday. The second best time is today. Here's everything you need to know to get started.

The Power of Starting Early

Thanks to compound interest, time is your greatest asset. Consider two savers:

Early Emma:

• Starts at 25

• Saves $500/month for 10 years

• Stops at 35

• Total invested: $60,000

• At 65: ~$1.1 million (at 8% returns)

Late Larry:

• Starts at 35

• Saves $500/month for 30 years

• Never stops

• Total invested: $180,000

• At 65: ~$750,000 (at 8% returns)

Emma invested 1/3 as much but ended up with more. That's compound interest.

Try our Retirement Calculator to see your numbers.

Retirement Account Types

401(k) / 403(b)

What it is: Employer-sponsored retirement account

2026 Limits:

• Employee contribution: $23,500

• Catch-up (50+): Additional $7,500

• Total (with employer): $70,000

Key features:

• Pre-tax contributions (traditional) or post-tax (Roth)

• Employer matching (free money!)

• Limited investment options

• Loans possible but not recommended

Traditional IRA

What it is: Individual retirement account with tax-deductible contributions

2026 Limits: $7,000 ($8,000 if 50+)

Key features:

• Tax deduction now, pay taxes in retirement

• Anyone with earned income can contribute

• Income limits for deduction if you have a 401(k)

• Required minimum distributions at 73

Roth IRA

What it is: Individual retirement account with tax-free growth

2026 Limits: $7,000 ($8,000 if 50+)

Key features:

• No tax deduction now

• Tax-free growth and withdrawals

• Income limits for direct contribution

• No required minimum distributions

• Can withdraw contributions (not gains) anytime

Which Should You Prioritize?

1. 401(k) up to employer match (free money) 2. Max Roth IRA (if income-eligible) 3. Max 401(k) (up to $23,500) 4. Taxable brokerage (for additional savings)

How Much Do You Need to Retire?

The 25x Rule

Multiply your desired annual spending by 25.

• Want $50,000/year? Need $1.25 million

• Want $80,000/year? Need $2 million

• Want $100,000/year? Need $2.5 million

This assumes a 4% safe withdrawal rate.

The 80% Rule

Plan for 80% of your pre-retirement income. You'll likely spend less on:

• Commuting

• Work clothes

• Payroll taxes

• Retirement contributions

But possibly more on:

• Healthcare

• Travel

• Hobbies

Employer Matching: Free Money

If your employer offers matching, always contribute enough to get the full match.

Example:

• Employer matches 50% of contributions up to 6% of salary

• You make $75,000/year

• You contribute 6% = $4,500

• Employer adds $2,250

• That's a 50% instant return!

Getting Started Today

If You're Just Starting Out:

1. Enroll in your 401(k) (at least to the match) 2. Open a Roth IRA (robo-advisors make this easy) 3. Set contributions to increase annually 4. Choose target-date funds if unsure about investments

If You're Behind:

1. Calculate your gap using our calculator 2. Maximize catch-up contributions if 50+ 3. Consider delaying retirement or reducing target spending 4. Look at HSA accounts for additional tax-advantaged savings

Investment Options

Target-Date Funds

Set it and forget it. Choose a fund with your expected retirement year (e.g., Target 2055 Fund).

Pros: Automatic rebalancing, becomes conservative over time Cons: Higher fees than DIY, one-size-fits-all

Index Fund Portfolio

Build your own with low-cost index funds:

• Total US Stock Market

• Total International Stock Market

• Total Bond Market

Pros: Lower fees, more control Cons: Requires rebalancing

Robo-Advisors

Let algorithms build and manage your portfolio. See our robo-advisor guide.

Tools to Help

• Retirement Calculator - See if you're on track

• Investment Growth Calculator - Model scenarios

• Compound Interest Calculator - See growth over time

• Robo-Advisor Reviews - Automated investing options