The Basics of Retirement Planning

October 9, 2025
retirement planning basics


Planning for retirement is one of the most important financial steps you can take. While the details vary for every individual, the fundamentals remain the same. A well-crafted retirement plan provides clarity and confidence as you move into the next stage of life.


Why Retirement Planning Matters

Retirement is not just about leaving work behind. It’s about creating the financial freedom to live the life you want, on your terms. Without a retirement plan, you risk outliving your savings, paying more taxes than necessary, or feeling uncertain about your future.


A strong retirement strategy gives you control. It helps you understand where you are today, where you want to be, and the steps needed to get there.


Step One: Know Your Retirement Goals

The foundation of any retirement planning process begins with your goals. Ask yourself:

  • When do I want to retire?
  • Where do I want to live?
  • What kind of lifestyle do I want to maintain?


Some people picture a quiet life close to home. Others see retirement as a time for travel and new experiences. Your answers will determine how much income you need each year and how long your retirement savings must last.


Step Two: Understand Your Retirement Expenses

Expenses don’t disappear in retirement. In fact, we see many people spend more during their retirement years.


Separating your expenses into fixed and discretionary categories is the first step. Fixed expenses include housing, food, insurance, and healthcare. Discretionary expenses include vacations, entertainment, shopping, etc


Understanding your retirement budget early helps you plan with greater confidence.


Step Three: Take Stock of Your Retirement Income Sources

Retirement income typically comes from several places. Social Security, employer pensions, personal savings, and investment accounts. The key is to understand how these sources work together.


Social Security benefits depend on your work history and when you choose to start claiming. Pensions, if available, may provide predictable income. Savings and investments—including 401(k)s, IRAs, and taxable accounts—fill the gap between what guaranteed sources provide and what you actually need.


Step Four: Build a Retirement Savings Strategy

Your retirement savings strategy should balance growth with preservation. As you get closer to retirement, the focus often shifts from aggressive growth to protecting what you’ve built.


A diversified portfolio can provide growth while managing risk. The right allocation depends on your timeline, comfort level with market volatility, and income needs.

If you’re still in your 50s or early 60s, maximizing contributions to your 401(k) or IRA can boost your retirement savings. Catch-up contributions can be especially valuable in the years leading up to retirement.


Step Five: Plan for Taxes in Retirement

Taxes are often overlooked in retirement planning, yet they play a significant role in your plan.


Withdrawals from traditional IRAs and 401(k)s are generally taxed as ordinary income. Roth accounts, on the other hand, can provide tax-free income if conditions are met. Strategic planning around when and how to take distributions can reduce your tax burden over time.


A tax-efficient withdrawal strategy can help extend the life of your retirement savings.


Step Six: Prepare for Healthcare Costs in Retirement

Healthcare can be one of the largest expenses in retirement. Medicare provides a foundation, but it doesn’t cover everything. You may need supplemental insurance to help with deductibles, copayments, and prescription costs.


Long-term care is another factor to consider. Many retirees underestimate the cost of extended care, whether at home or in a facility. Exploring long-term care insurance or other strategies can protect your assets and provide peace of mind.


Step Seven: Protect Your Estate

Estate planning ensures that your assets are distributed according to your wishes and that your loved ones are cared for. At a minimum, review your will, power of attorney, and healthcare directives.


If your estate is larger or more complex, trusts and other strategies may help streamline the transfer of wealth. Estate planning is not just about money—it’s about making decisions now that protect your family later.


Step Eight: Revisit and Adjust Your Retirement Plan

Retirement planning is not a one-time event. Life changes, markets fluctuate, and tax laws evolve. Regularly reviewing and updating your retirement plan ensures it stays aligned with your goals.


Many people find value in working with a financial advisor during these reviews. An advisor can provide perspective, identify blind spots, and recommend adjustments based on your current situation.


The Value of Working With a Financial Advisor

While the basics of retirement planning are straightforward, the details can quickly become complex. Social Security timing, tax-efficient withdrawal strategies, and investment allocation are just a few areas where professional guidance can make a difference.


Working with a retirement advisor gives you a partner who can help you navigate uncertainty and create a financial plan designed for your life.


Final Thoughts

The basics of retirement planning begin with knowing your goals, understanding your expenses, and building a strategy for savings, income, taxes, and healthcare. Estate planning and regular reviews keep your plan strong as circumstances change.


Retirement is not just about reaching a financial finish line. It’s about creating a future that reflects your values and gives you confidence.


FAQs (Frequently Asked Questions)



This is overwhelming, where do I start?


·     The best place to start is to determine your current income and how much you typically spend annually. What is your net monthly income? Do you typically spend all of your net income or save a portion? If you save a portion, how much and then how much do you have left to spend? This is an easy way to back into your annual expenses.

 

How much do you charge for a retirement plan?

·     We charge either a flat fee for a retirement plan or an annual fee based on assets under management, which includes retirement planning.


How do you know if I am on track for retirement?

·     We use our financial planning modeling software and use Monte Carlo Analysis and withdrawal rate analysis to determine if someone has a successful plan. And no, Monte Carlo Analysis doesn’t mean taking your investments to Vegas.


Are you taking new clients and what is the first step to explore working with you?

·     Yes, we are taking new clients! Feel free to email Amy at amy.kelly@prudential.com and she will schedule a complimentary discovery meeting with you.




Surviving spouse tax penalty / widow's penalty

What is the Surviving Spouse Tax Penalty?

May 28, 2026
Understand the Surviving Spouse Tax Penalty & its impact on taxes. Contact us for financial planning strategies today!
income tax planning for 2026

2025 Income Taxes are Filed, Now What?

April 12, 2026
You just filed your income taxes. Now what? You filed your income taxes for 2025. Don’t put those returns away just yet. There is important information you need to know to plan for 2026: What was your Adjusted Gross Income for 2025? If you are still working, consider these strategies for this year’s IRA / Roth IRA contributions: Do you expect your income to be similar this year and if so, were you under $240,000 (married filing jointly) or $153,000 (single) last year and expect to be under that amount for this year to make a Roth IRA contribution for yourself and your spouse? If yes, now may be a great time to make your contribution since the market has been so volatile so far this year. Make your contribution now and hopefully the market will go up from here. If your Adjusted Gross Income was too high to make Roth contributions, you may be eligible to make “back-door” Roth contributions. You can do this as long as you don’t already have an IRA account. If you are still working and making 401k catch up contributions, check your AGI, if it exceeded $150,000 for 2026, your catch-up contributions must be made as Roth 401k contributions. This means, your taxes could increase for 2026 because your catch-up contributions are no longer pre-tax. Do you have a Health Savings Account (HSA) and did you maximize your contribution and income tax deduction for 2025? If you did, excellent work! If not, set up your budget now so you can make the maximum deductible contribution for 2026. Did you know your HSA account is the best savings account to have (in my opinion), because an HSA is the only account Uncle Sam never taxes (as long as you use the account for qualified medical expenses)!! Did you itemize or take the standard deduction? If you took the standard deduction last year and expect to again this year, you may want to take advantage of the EXTRA $2,000 charitable deduction for charitable contributions of cash. Are you still working and age 60? The SECURE 2.0 Act provides an additional 401k catch-up contribution of $11,250 for those ages 60-63. Are you retired and age 65 or over? Was your Adjusted Gross Income over $150,000 (married filing jointly) or $75,000 (single)? If so, you likely part of your extra standard deduction amount for seniors of $6,000 per person. This deduction is prorated, so even if you exceeded the Adjusted Gross Income threshold, you may have received a portion of the additional standard deduction amount. If your income was higher and you lost all or a portion of the deduction, perhaps look at income tax planning for this year to lower your AGI. Was line 15 on your tax return $0 or a negative number? If so, you may have missed a HUGE opportunity to do a Roth conversion. Consider planning to not miss out on this income tax planning opportunity again this year. Please reach out to Amy directly with any questions at amy.kelly@prudential.com . Content in this material is for general information only and not intended to provide specific individualized tax, legal advice, or recommendations for any individual. We suggest that you discuss your specific situation with a qualified tax or legal advisor .
Mega Backdoor Roth Strategy for saving for retirement

The Mega Backdoor Roth Strategy

February 16, 2026
This is a Roth savings strategy for higher income earners who have the ability to save above and beyond their 401k/403b employee contributions limits of $24,500 (or $32,500 if over age 50 in 2026). However, keep in mind the maximum combined employee and employer contribution limit for 2026 is $72,000. This means you are limited as to the amount of after-tax contributions you can make annually. Pros: - Able to direct funds to Roth if you cannot make direct Roth IRA contributions due to income phase-out ranges (phase-out starts at $81,000 of income as single filer and $129,000 for married filing jointly). Logistically you make after-tax 401k contributions that are then converted to Roth within the retirement plan or rolled out to a Roth IRA. - Able to direct funds to Roth if you cannot make back-door Roth IRA contributions (non-deductible IRA contributions converted to Roth). If you already have money in any IRA and make non-deductible IRA contributions with the intent to convert to Roth, you will pay tax on all or part of your current IRA balances. Cons: - Your employer retirement plan must allow for after-tax contributions. - Your employer retirement plan must allow Roth contributions to convert within the plan. - If you make the after-tax 401k/403b contributions, you must then remember to convert to Roth within the retirement plan or rollover to an outside Roth IRA for the growth on the after-tax contributions to be characterized as Roth. - You must be eligible to rollover after-tax contributions out of your 401k, typically in-service 401k rollovers are permitted at age 59 ½ - You are still limited in the amount of after-tax contributions you can make by the $72,000 maximum combined employee and employer contribution annual limit. Mega backdoor Roths are still typically a great strategy for those who have excess funds to save and/or need to catch up on their retirement planning savings. Please reach out to Amy directly with any questions at amy.kelly@prudential.com . Content in this material is for general information only and not intended to provide specific individualized tax, legal advice, or recommendations for any individual. We suggest that you discuss your specific situation with a qualified tax or legal advisor. A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.