Retirement is the largest financial goal most people will ever have. While the focus is often on the dollar amount needed to cover costs, there’s more to a successful retirement plan than just savings. Balancing immediate financial needs with long-term goals, deciding on the best accounts for savings, and making smart investment choices are all vital components.
As retirement approaches, reviewing your plan one last time is crucial to ensure your savings last. If you plan to retire in 2025, here are three important moves to make now:
It’s good practice to review your financial plans for retirement one final time to ensure you have an adequate amount of savings. Although you can’t predict exactly how much you will spend, you can make a rough estimate based on your current annual expenses and life expectancy.
A common rule of thumb is to withdraw 4% of your savings in the first year of retirement, adjusting this amount for inflation in subsequent years. This strategy is designed to help your savings last at least 30 years. If this rule suggests you’re not as prepared as you thought, consider remaining in the workforce a bit longer or scaling back retirement expenses.
If you haven’t yet claimed Social Security, estimating your monthly benefit is essential.
Smart steps for 2025 retirement planning
Your benefit depends on your work history and the age when you sign up, with the maximum benefit available at age 70.
Those with shorter life expectancies or less personal savings might benefit from signing up earlier, starting at age 62. Log in to your Social Security account to use the benefits calculator tool. Compare estimated benefits at various claiming ages by multiplying the monthly benefit by the number of months you expect to receive payments.
Choose the age that provides the largest lifetime benefit unless your specific financial situation or life expectancy suggests otherwise. Retirement involves a significant lifestyle change, not just a financial one. Some retirees may feel lonely or lack a sense of purpose, while others may find their actual expenses differ from their estimates, risking faster depletion of savings.
To prepare, consider options such as part-time work to supplement income and provide social interaction, or reevaluating travel plans to save money. Schedule regular check-ins with yourself to ensure your expectations align with reality. If needed, enact your backup plans to prevent financial strain.
Retirement is a time of adjustment, and thorough preparation can help ensure a smooth transition and a financially stable future.
