Preparing for retirement over the decades

There’s no one sure-fire way to ensure you’re prepared for retirement, and what a person perceives that they need in retirement will be based on many factors including lifestyle and health. While retirement may feel like it’s far away when you’re in your 30’s, the closer you get to 65, the clearer what your day-to-day retirement looks like in your mind should be. Hitting your 50’s and feeling like you’re not on track for the life you want in retirement can be scary but starting early can help alleviate some of those worries. 

With that said, there are helpful guidelines for how prepared you need to be for your retirement throughout your life, no matter how many years away you are from the big day. 

Preparing for Retirement: 30 years away 

Retirement is probably the last thing  you’re thinking about when you’re in your 30’s, and that’s okay. At this stage it’s more common to be thinking about things like getting established in your career, or starting a family, or maybe buying your first home – the reality is retirement is a very long way away at this stage, but there are certain steps you can take in your 30’s to establish a financial foundation that will reap benefits further down the road. 

  • Start early. When you are young, good financial habits are the key to setting yourself up for retirement. And starting early is key. Simple habits like budgeting, monitoring expenses and saving what you can today will go a long way in future years. 

Chart of accumulated return over 2 to 30 years totaling just under $125,000
Chart of accumulated return over 1 to 19 years totaling over $45,000

For illustrative purposes only; not indicative of any actual performance. 


Saving just $100 per month can lead to nearly $122,000 in savings over 30 years, assuming you earn a hypothetical 7% per year of compounding interest. If you decide to wait and save the same amount for 20 years, your savings only grow to $52,000. That’s a big difference! 

  • Focus on your savings rate rather than the dollar amount.  The rule of thumb at this stage is to try to set aside at least 15% of your income for retirement. Many people have expenses at this stage of life that make saving that much impossible, and that’s okay too. As shown above, even putting aside $50-$100 a month can make a big impact over time. Talk to a financial professional to make sure you are making the best use of all of your options to include employer sponsored plans or Roth and traditional IRAs. 

  • Know your options and diversify. At this stage, you can also explore a mix of financial options, including a blend that promises more long-term growth as well as some shorter term, and perhaps riskier, options. This is because you have more time to recover from any potential losses that could occur with investment in higher returning financial products.  

  • Do you have coverage? If you have dependents, this is also a good time to review and make sure you have adequate life insurance coverage that reflects you and your family’s situation. If something were to happen, would your spouse, kids or parents be financially secure? 

  • Watch your expenses as well. At this stage of life, it’s normal to pay for things like a house, student loans, or your kids’ education. However, as your salary increases, try to be mindful of how your lifestyle changes as well. Instead of simply spending more because you’re making more, consider setting aside a portion of any raises you get for additional savings or paying off debt. If you get used to living within your means now, you’ll benefit throughout your life and into retirement. 

Preparing for Retirement: 20 Years Away 

Once you reach your 40’s, it’s a good idea to check in on your progress. Start thinking about what retirement looks like in your eyes. Ask yourself questions like where you want to live, do you plan on moving? Downsizing? Will you own your home entirely by the time you retire? What about travel, staying active, visiting your grandchildren? All of these decisions will impact how much income you will need when you retire. 

You may not have an exact dollar amount at this stage, but you should be starting to build a more solid sense of what your expenses are going to look like – at least the major ones. This is the stage where retirement might start to feel a little bit more like a reality, and that can be scary. Feeling like you don’t have enough time to save and prepare can cause a lot of anxiety at this time, especially if you have children or other dependents – but it’s important to remember that you still have time to try to get yourself on the right track.  

  • Review and adjust. Are your current products and plans reflective of where you are in your life? Are they doing the most they can for you? Your income levels and financial needs may have changes since you first got your life insurance policy – you may have new dependents, or different dependents. This is a good time to review your policies and adjust where you need to. This is also a good time to review any contractual options in products like your term life insurance to see if you can convert to permanent coverage that provides long-term protection and can accumulate cash value used towards retirement if the needs decrease later in life (accessing cash value will reduce death benefit and available cash surrender value). 

  • Maximize your retirement plan. As you settle into your career and adult life, make sure you are getting the most out of your savings and investments. This is the time to really build your portfolio and explore opportunities to maximize your returns. Ensure that your retirement plan is doing the most that it can for you at this stage. 

  • Consider extended care needs. You may not think about it when you’re still young and healthy, but long-term healthcare can become a significant expense in retirement. A 65-year-old couple retiring today is likely to spend an average of $315,000 on healthcare costs throughout their retirement.1  

Preparing for Retirement: 10 Years Away 

Be clear on your life’s goals – when do you want to retire? What does your ideal retirement look like? What do you still want to do before you retire?  

At this stage, retirement begins to feel real – very real if you feel like you’re behind on your goals. This is the time when the financial habits you picked up in your 30’s and 40’s will really start to show. If you’re not where you want to be at this stage, there’s time to get back on the right track, but not as much time as you might like. Adjustments at this stage can be made, but they need to be decisive in order to have a material impact on your retirement. 

  • Check in with your financial professional. If it’s been a while since you connected with your financial professional, now is the time. Go back through the goals you’ve made for retirement, and make sure they still represent what you want and that you are on track to reach them.  

  • You will also want to consider your long-term housing goals. Owning a home, or desiring to, can impact your ability to save for retirement. If you don’t own your home yet, consider how long it will take to pay off your mortgage - it’s not out of the question to still be paying off some of your mortgage in retirement, but if your home is an asset you own entirely in retirement, it can afford you a little more financial flexibility. 

  • Review and adjust your budget for retirement. At this point, you need to have a good estimate of your retirement budget to include your housing expenses, healthcare costs, and lifestyle spending. Keep in mind that the cost of living fluctuates over time, and work with your financial professional to make sure you will be adequately covered throughout the duration of your retirement.  

  • Dial back on the risk. This can be a good time to reconsider or at least reevaluate your investment allocations. Investing aggressively when you are younger often makes sense, but as you approach retirement, it may be a good idea to shift some of your savings into more stable options. A financial professional can be an asset in this regard. 

  • Protecting your nest egg. Consider the role that your life insurance is playing. At this stage, the role of life insurance is to reposition assets that may be at risk of loss, whether it’s from taxes or down markets. Talk to your provider about how you can position your life insurance toward protecting what you have for your loved ones,. 

  • Begin to set dates. Now is also a time to consider details like when you want, or can afford, to retire, when you want to start taking Social Security Benefits, and any catch-up contributions you may want to make to your IRAs or employee-sponsored retirement plans. 

  • Work with an attorney. You may also want to check in on your estate at this stage, to ensure that your assets are distributed how you wish when the time comes.  

Preparing for Retirement: 5 Years Away 

What was once a distant thought is now right on your doorstep. For some, the last few years before retirement are all about planning how you’re going to spend your time, what hobbies you might pick up, and how often you’ll get to see your grandchildren. For others, this can be an incredibly stressful time. Even if 65 is coming sooner than you’d like, there are still steps you can take in these last five years to make sure you’re as prepared as you can be when the day comes.

  • Know what you have. Make sure you feel comfortable with the amount you have in savings. You need to be able to cover your expenses without running out of money too soon. As a rule, the total balance in your 401(k) and IRA accounts should be about 20-25 times your expenses. If you’re not at that level, consider how you can adjust your budget to allow for higher contributions to your retirement savings. You may also have to consider delaying retirement if you’re too far way from your targets. 

  • Know your withdrawal rules. It's also very important that you understand the withdrawal rules for your retirement accounts, and to have a withdrawal strategy in place to ensure you’re withdrawing the right assets for the right purpose. You don’t want to pay penalties because you pulled money out early or didn’t know you had to take a required minimum distribution - if you’re not sure about this, contact your financial professional. 

  • Understand your expenses in retirement. At this stage, you should have a more or less complete view of what your expenses are going to be in retirement, and how much you will need to cover those expenses for the remainder of your life. If you’re short of your target, you may have to make an adjustment to your spending, allocate more money to savings, or reconsider your retirement date. 

  • The role of life insurance. At this stage, life insurance can play a number of roles: it can be used as a way to leave tax-free lump sum to their loved ones or their estate. Life insurance can also be used to pay for estate taxes, or any debts that you have that remain after your death. What type of policy you have will also impact its role in your retirement – you may be able to surrender your cash-value life insurance policy, for example, you could be able to access that money, though there would be tax implications. 

Unfortunately, at this stage the margins become finer and finer in terms of your level of preparedness for retirement. While no-one has a crystal ball, in the years immediately leading up to the big day, it’s important to have as complete and accurate a picture as possible of your finances - if you have any questions, doubts or uncertainties, contact your financial professional as soon as possible to ensure that you’re ready when the day comes. 

Readying for Retirement the Right Way 

Retirement planning isn’t a cookie cutter exercise, but there are some general guidelines that can help steer you toward a comfortable retirement. Most people head into retirement not feeling prepared – financially or emotionally. Even if you are worried that you are not where you should be, there’s always time to make adjustments to redirect yourself. Whether retirement is still far off in the distance or coming up faster than you’d like, it’s never too early to start planning, or too late to do something about it.  

1"Healthcare in Retirement Will Cost an Average of $315,000,” Plansponsor, 16/05/2023

This article is provided for general informational purposes only. Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.? 

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Mathew Steward is an agent licensed to sell insurance through New York Life Insurance Company and may be licensed with various other independent unaffiliated insurance companies in the states of CA (CA Insurance License #0I11665), CO, FL, GA, ID, KS, LA, MD, MO, NC, NV, NY, OH, OR, PA, SC, TX, VA, and WI. No insurance business may be conducted outside the states referenced.

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