April 2025

What if the way you’ve been thinking about retirement isn’t quite right for you? We tend to picture retirement as a single goalpost: save enough, hit a number, and then stop working. However, the truth is that how you plan for retirement can and should be shaped by your lifestyle, goals, and even your comfort level with risk. There isn’t a single path. There are options, and understanding those options is what helps you make smarter choices.

1. Choosing Between a Traditional and Roth IRA

One of the first big decisions you might face when planning for retirement is whether to contribute to a Traditional IRA or a Roth IRA. They sound similar, but they work in different ways, and your choice can affect your taxes now and later.

Here’s the basic difference between Traditional and Roth IRA accounts. With a Traditional IRA, your contributions may be tax-deductible in the year you make them, which can reduce your taxable income right away. However, you’ll pay taxes when you withdraw the money in retirement. A Roth IRA works in reverse; you pay taxes on your contributions now, but your withdrawals in retirement are generally tax-free.

So, which is better?

That depends on your current and expected future tax bracket. If you expect to be in a lower tax bracket in retirement, a Traditional IRA might save you more overall. If you think your taxes will be higher later, or you simply like the idea of tax-free withdrawals, a Roth IRA may be more appealing.

Also, consider your age and how long your money has to grow. Roth IRAs can be a strong option for younger workers who have decades of growth potential ahead. There’s no required minimum distribution for Roth IRAs either, so you’re not forced to start withdrawing at a certain age like you are with a Traditional IRA.

2. Thinking About When You’ll Retire (And How)

Some people dream of retiring early and traveling. Others plan to continue working part-time into their 70s, either because they love their work or want to stay active. Your retirement timeline significantly impacts everything: how much you need to save, the type of income you’ll rely on, and the level of risk you can afford to take.

If you want to retire early, you’ll need to plan for a longer retirement. That means more savings and possibly drawing from accounts before Social Security kicks in. You may need to bridge the gap with additional income sources, such as a taxable brokerage account or cash savings.

If you plan to work longer, your savings may not need to stretch as far, but you will still want to build flexibility into your plan. Life doesn’t always go according to schedule. Health issues, job changes, or caregiving responsibilities can lead to early retirement, whether you planned for it or not.

The key here is to avoid assumptions. Don’t just pick a retirement age because it sounds standard. Consider what you want your day-to-day life to look like and work backward from there.

3. Deciding How Much Risk You’re Comfortable With

This part isn’t just about stocks or bonds; it’s about knowing how you feel when the market drops.

Are you the kind of person who checks your account balance constantly and panics when you see a dip? Or do you tend to take a long-term view and ride out the ups and downs? Understanding your risk tolerance can help you build a retirement plan that you’ll actually stick with.

You don’t need to be overly aggressive to build wealth. But if you’re too conservative, especially in your early saving years, you might miss out on growth that could have made a big difference later.

This is one area where people often set it and forget it, but your risk tolerance can shift over time. Revisit your investment mix every few years, or after major life changes, to ensure it still feels right.

4. Factoring In Healthcare and Insurance

Many people overlook this aspect until it’s staring them in the face. But healthcare can be one of the biggest expenses in retirement.

Medicare helps, but it doesn’t cover everything, and it doesn’t start until age 65. If you retire earlier than that, you’ll need a plan to cover insurance in the meantime. And even once you’re eligible, you’ll still face out-of-pocket costs, premiums, and possibly long-term care expenses.

Some people set up a Health Savings Account (HSA) while they’re still working to help offset future healthcare costs. Others consider long-term care insurance if they are concerned about potential nursing or home care expenses in the future.

This isn’t the most exciting part of retirement planning, but it’s essential. Having a cushion for medical costs can give you more peace of mind and help you avoid having to dip into your retirement funds at the worst time.

5. Considering Lifestyle and Location

Where you live and how you live in retirement can drastically shift how much you need to save.

Are you planning to downsize your home? Move to a lower-cost area? Stay where you are, but travel frequently? These choices carry very different price tags. Housing and transportation are often the largest budget items for retirees, so it’s worth considering the specifics.

Some people choose to rent in retirement to avoid the responsibilities of homeownership. Others seek multi-generational living to reduce costs and stay close to family.

The more clearly you can picture your ideal lifestyle, the better you can prepare financially. Generic retirement calculators don’t know whether you want to RV across the country or garden in your backyard—they just spit out numbers. The details matter.

What It All Comes Down To

Retirement planning isn’t just about hitting a savings goal. It’s about creating a plan that aligns with who you are, how you want to live, and what feels right for your future.

There’s no single best account, no universal retirement age, and no magic number that works for everyone. What works for you will depend on your habits, values, and how you picture your later years.