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 What Your Financial Plan Should Look Like At Retirement Thumbnail

What Your Financial Plan Should Look Like At Retirement

There's no magic formula for how much you need to save for retirement. It's not $1 million or 12 times your annual salary. Everyone's number looks different.  While rule-of-thumb formulas can be a guide, you need more than a formula to help you figure out how much to save.

DIY financial planning can be daunting. You have to factor in lifestyle changes that happen in retirement, as well as higher medical costs and unexpected bills.

Below we've got all the details you need to help figure out how much you need to save by the time you retire, as well as account options to help you make a solid financial plan.

Personal Financial Plan

What are your personal finances like right now? Do you have a lot of debt? Do you follow a budget every month?

Financial planning for retirement is a lot like figuring out your monthly budget. If you've done that then you don't need to be afraid of looking at your retirement finances.

First, consider all the guaranteed income you will have. This includes payments from pension plans and Social Security, as well as any other sources of income you'll have.

Next, think of your expenses. Keep in mind that you may not have a mortgage by then, so your housing expenses may be smaller. This may be tough to estimate if you are planning a lifestyle change during retirement (more traveling, living out of an RV, etc.).

Remember that during retirement you may have larger healthcare costs. Older people often have more doctor visits and procedures, as well as other health conditions that may arise. Long-term care insurance may defray some of the costs for assisted living or nursing care, but you will still come out of pocket for a portion if you end up needing these services.

Compare your income to expenses and find the difference. If you will have more expenses than income, you'll need to accumulate assets that can then be invested to create the income needed to fill the gap between anticipated expenses and your guaranteed income sources.

Types of Retirement Investments

As you work on retirement planning, you'll find there are different types of accounts where you can put your money. We've detailed the differences below:

Traditional 401(k)

This is an account that your employer may offer to its employees (not all companies have this benefit as they are expensive for the company).  They'll deposit money each pay period for you, in the amount you direct, into your participant account. This is a pre-tax contribution that saves you federal and state income tax.

You'll have to fill out a form that details how much you want to invest. Sometimes the company will have a matching program (meaning they'll contribute something to your account as well).

Because the contributions are before taxes, you'll have to pay taxes on the funds when you withdraw them during retirement. There are also limits on how much you're allowed to contribute per year. It increases every couple of years, but in 2021 the limit is $19,500 ($26,000 if you're over 50).

Roth 401(k)

This type of 401(k) is also offered by employers, but the money you contribute is after taxes. That means you don’t receive any tax benefit in the year of contribution, but no taxes are due when you withdraw funds during retirement. 

The same limits for annual contributions to a traditional 401(k) apply for the Roth 401(k) on how much you can contribute each year.


This is a retirement account that you open, not your employer. It's tax-advantaged, meaning you can generally claim your contributions as tax-deductible depending on your household annual income and if you or your spouse participate in an employer-sponsored retirement plan. The contribution limit each year is $6,000 or $7,000 for those 50 and older.

You're required to withdraw funds from it every year after you reach age 72 and pay taxes on the withdrawn amount. The distribution amounts will vary based on your life expectancy and the size of your account.

Roth IRA

Similar to an IRA, this is an account you set up and contribute to yourself, separate from an employer. With a Roth IRA, you contribute money after it's taxed. While you don't get any tax deduction for your contribution, you also don't pay any taxes when you withdraw from it during retirement.

Your money can grow tax-free in this account. There are limits on how much you can contribute, like with a traditional IRA. If you make too much ($140,000 annually for an individual or $208,000 for a married couple in 2021) you can't contribute to this type of account.

Getting Help with Wealth Management

If these options feel like too much to figure out, financial assistance is available. Retirement is stressful enough, so getting help with personal financial planning is a smart move. An advisor can help you make the most of the retirement savings options available.

Financial planners and advisors can help you understand the options and figure out which ones are best for your lifestyle. They can also explain the limits and rules that go along with investing in each of these account choices. If you max out your contribution on one option, they can recommend the next best account for your needs.

A financial advisor can also help with social security planning, determining what benefits you will be able to collect based on how long you plan on working. What age is right to start claiming benefits? They can help you understand the pitfalls of claiming too early and other minutiae of social security regulations.

Money Management Assistance from Integra Capital Advisors

Coming up with your own financial plan can be hard, and you never know if you're thinking of all the eventualities. If you feel overwhelmed with the choices and the risks involved, don't leave your retirement livelihood to chance.

Work with the trained financial advisors at Integra Capital today to set up a plan for your retirement. Our services are made for you, whether you're an entrepreneur, multi-generational family, professional, or other unique demographic. Women especially have unique wealth planning needs, which is why we offer financial education and resources for women of all ages

We work with anyone who wants to gain more confidence about your financial future. Schedule your complimentary introductory call today and find out how we can help you plan for a promising retirement.