Retirement Planning

Retirement can be a daunting topic, but you can make it easier by starting your retirement planning early, seeking advice, and settling on a strategy you can put into motion decades before you retire.

• 401(k) Plans
• Individual Retirement Accounts (IRAs)
• Social Security

Retirement Basics Made Easy

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Frequently Asked Questions

• How much money do you need to retire?
  You can know how much money you’ll need to retire by following a series of steps that provide a ballpark dollar amount. Calculate the income you will need during retirement, estimate additional income sources such as Social Security, use the 4% rule, then determine how much you need to save to hit your goal.

Learn More: How Much Money Do You Need To Retire?

• How do you retire early?
  Plan ahead. Some of the most important decisions you can make as you plan to retire early include setting an age at which you want to retire, whether you’ll work when you’re retired, and what level of income you’ll need once you retire. This process will require you to choose investment strategies, a choice that could be easier by hiring a trustworthy financial advisor.

Learn More: How To Plan for an Early Retirement

• What’s a good when-can-I-retire calculator?
  The best retirement calculators are accurate, easy to use, informative, and provide a weighted result. Based on The Balance’s research, the MaxiFi (formerly ESPlanner BASIC) and NewRetirement retirement calculators are the best available retirement calculators on the market.

Learn More: The Best Online Retirement Calculators

• How long will your retirement savings last?
  The answer to this question depends on a variety of factors, including how long you live, your health care expenses, inflation, how much you withdraw and spend, your rate of return, and your sequence of returns. These factors aside, one popular method of knowing how long your retirement will last is the 4% rule.

Learn More: How Long Will Your Money Last in Retirement?

• How old do you have to be to retire?
  There is no single answer for how old you have to be to retire. The age at which you leave the workforce depends on many factors. However, the average age of retirement in the U.S. is 65 for men and 63 for women as of 2021. It may help to take some time to figure out if you have enough money to retire.

Learn More: Average Retirement Age in the United States

• What is the multiply-by-25 rule for retirement saving?
  The 25x rule provides a lump-sum amount that allows you to make steady withdrawals each year for a span of 30 years. It works because it allows you to gauge your retirement needs without having to factor in a vast number of unknowns, and with a bit of cushion built-in. The 25x rule is one of several retirement rules, including the $1,000-a-month rule.

Learn More: The Multiply-by-25 Rule for Retirement Saving

• What’s the difference between a traditional IRA and a Roth IRA?
  The main difference between traditional and Roth IRAs is when you pay taxes. Traditional IRA contributions can be taxed when they’re made, but you’ll pay income tax when you withdraw the funds during retirement, whereas Roth IRA contributions are made with after-tax dollars.

Learn More: Traditional IRA vs. Roth IRA: What’s the Difference?

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Sources

The Balance is committed to using high-quality, reputable sources—including peer-reviewed studies—to support the facts in our articles. Read about our editorial policies and standards to learn more about how we fact check our content for accuracy.