You’ve saved and planned ahead. But now retirement is getting closer, and having a plan can help you set your goal and keep you on course. It’s never too late to make a plan. Take the first step toward putting your plan together by asking yourself the following questions. 

How do I want to live in retirement?

Is a traditional retirement in your future—perhaps golfing, traveling, or visiting with friends and family? Maybe even taking care of the grandkids? Or do you see yourself spending more time at a vacation home? Relocating? Opening a small business? Among current workers, 80% expect to work in retirement, but only 28% actually do.² Whatever you decide, your retirement lifestyle will have an impact on how much you need.

TIP: Before retirement, test drive the things you want to do and places you may want to live.

How much money will I need in retirement?

Just like your expenses now, your expenses in retirement will fall into three groups: essentials, medical/healthcare, and nonessentials.

In retirement, people usually spend more money at the beginning, with spending on nonessentials driven by leisure activities. Retirees and their spending then slow down with age for a while before spending rises again, driven by healthcare expenses. Healthcare could add up to $285,000 or more for a married couple over the course of their retirement.³ Think about your health: Do you have any chronic issues or a family health history that may add to your spending needs as you age?

Estimating your expenses is important for planning, and it can be a powerful motivator for saving more. In fact, 9 out of 10 workers say seeing a projection of their spending in retirement motivates them to save more.⁴

TIP: Use a retirement income planner tool from a trusted source to project your retirement spending needs. It should provide an individualized plan to help you get on track and keep you there.

Where will my income come from?

Some of your retirement income may come from guaranteed sources and some may come from nonguaranteed sources. Guaranteed sources include Social Security, pensions, and annuities. Nonguaranteed sources include 401(k)s or 403(b)s, IRAs, and personal savings accounts. Make sure you add up what’s available to you from all sources, when it’s available, and how  you’ll access it. You’ll also want to include the tax implications of each of your retirement accounts, as some withdrawals will be taxable and some won't. Finally, calculate your Social Security benefit amount, which will depend on when you start taking it.

TIP: Think about all of the retirement accounts you have, and consider combining them for an easier-to-manage experience. 

What if there’s a gap?

If your estimated expenses are greater than your anticipated income, you’ll have a gap to fill. A good place to start is by increasing the amount you’re saving through an employer plan or IRA. The 2020 contribution limit for retirement plans is $19,500 ($26,000, if you’re 50 or older) and $6,000 for IRAs ($7,000, if you’re 50 or older). You may also think about delaying your retirement or even working part time once you’re retired.

TIP: Think about relieving some of your debt before you retire. Sixty percent of today’s workers say debt is a problem⁴—and it could get in the way of enjoying your time in retirement. 

Answering the questions in this checklist will help you visualize the retirement you want and how much you'll need to save to achieve it. Your retirement plan provider and other financial institutions should have tools to help you with some of the planning and calculations. You may also want to talk with your financial professional about putting together a formal plan for the retirement that’s on your horizon.