Show transcript
ALEX ROCA: Hello. And thank you for joining Women Talk Money. My name is Alex Roca, and I will be hosting today's conversation around retirement. Joining me for today's conversation are Vanessa Le, Director of Advanced Planning, and Sasha Heathman, Workplace Financial Consultant.
We're here today to talk about a goal that we probably all have in common—retirement. Naturally, retirement is a massive topic that we could spend a lot more than just 45 minutes on as women. It's actually even more important to be talking about retirement and planning for it as early as possible and as consistently as possible.
More specifically, what can we do to help Max out our retirement savings? How much can we determine is enough? And how do we get there? So, Sasha, I'm going to start with you. What are some of the things women specifically need to take into account when planning for retirement?
SASHA HEATHMAN: Sure. Well, I love, Alex, how you mentioned this is a goal that we all have in common. Now, what I'd like to start with is, I want to ask everyone in the audience who joined us today, close your eyes for a minute and imagine. Imagine yourself retired. What was the first thing that came to mind? Was it you on vacation?
Was it you spending more time with your family and your friends? Was it age? Was it health? Maybe it was a career pivot, transitioning from full-time work to part-time work. Whatever came to you, that's really where we start the retirement planning conversation. Visualizing what retirement looks like for you is so powerful because it helps us assess where we are today and where we still need to go. From there, we can also better prepare for the potential obstacles and the uniqueness that comes to planning specifically for women. I love our topic today because we're going to incorporate a little bit more of that visualization. And Vanessa's going to elaborate a little bit more on this, provide you with a few reflection questions to think about.
But to give you a sneak peak, for retirement planning, there's a qualitative side to that plan—so thinking about how you would spend your time if every day was Saturday. And then on the other side of that, if every day is Saturday, how much might that cost? So that's the quantitative side of retirement planning. And like you said, Alex, as women, we may need to plan a little bit differently.
So for example, healthy individuals can expect to live 20 to 30 years in retirement. That is a long time to pay yourself a paycheck. Now, specifically for women, since we tend to live five years longer than men, then that makes it even more critical that we make sure that we are saving enough.
So a few more realities that are unique to women that I'll call out here is we have to be more strategic with how we save and invest our money, especially since the gender pay gap hasn't really budged year to year. Now, we are definitely making great strides in the workforce. We're making it to those C-level-suite roles. We're making it to senior management. But the findings still show that we're paid $0.81 to the dollar compared to men.
Additionally, women, we are also more likely to take time off or even retire earlier to step into a caregiver role. So whether that's taking a time off to have our own children, retiring early to take care of grandchildren, or maybe it's a sick spouse or an aging parent, women are more likely to step back and into a caregiver role.
And the last one that I'll call out here is that we tend to live longer, which means that our health care costs tend to be higher—specifically, 18% higher for our lifetime out-of-pocket costs each year compared to men. And that doesn't even include our pregnancy related costs. So, Alex, these are just a few of the areas that we want to be aware of and build it into our plans so that the retirement vision that we just imagined can become a reality that's both exciting and empowering for our future.
ALEX ROCA: Absolutely. Thank you for sharing that, Sasha. And I think it's important to call out those differences, those special considerations that are strictly for women because it is what it is. And maybe in the future, it'll be different. But it is what it is. And once that, we can plan for it.
Now, something else you said, Sasha, that really caught my attention was something about having enough money, because that brings me to my next question. And it's no surprise because this is the most asked question that we get asked around retirement. So, Vanessa, I'm coming to you with this one. The million-dollar question—how much does somebody need to save for retirement?
VANESSA LE: Oh, man. You're right. This is, hands down, the number-one question that we hear every day. And it goes back to Sasha, when she was telling us to close our eyes and visualize retirement. I closed my eyes, and I was surprised to see an image of farm animals that came to mind. That's usually not me, but a farm is very expensive to maintain.
So as you're thinking about what retirement is going to look like for you—and fair warning, you might not like the answer because it is always, it depends, which is very frustrating, I know. But there's no magic number or magic amount that everyone needs. There's not a standard to have saved or a magic age that you need to retire, because everyone's situation is different, and everyone's goals and expectations are going to be different.
And there are so many factors that come into play, such as, what are your predictable expenses? What kind of a lifestyle do you envision? So as you're painting a picture of your retirement, ask yourself, what does your day to day look like in retirement? What's the most important thing to you? Is it travel? Is it to spend more time with family? And what age are you planning to retire? Because time frame matters.
And then what are your predictable sources of income? Where is that money coming from? Is it pension, your Social Security, any other retirement savings accounts? And what's the difference between those two? Meaning do or will your expenses exceed your savings? So we can say that you need $1 million. But the truth is, we really won't until we see what your personal financial picture looks like, and for us to ask you some questions that are very unique to your own situation. But we do understand that sometimes it's easier to work within some guidelines.
So if you're looking for a number right now, Fidelity does have a starting point where it says, aim to save 10 times your salary by age 67. And we know, this slide is very busy. It's a lot to look at. It's our legal way of saying, it depends. There's a lot of what ifs and variables that we need to take into consideration to determine your specific number or goal that you need to hit for retirement.
And we know that that seems like a big number, but there are a lot of nuances that go along with these guidelines. So again, your personal magic number depends on so many factors. You could need more than 10 times or significantly less than 10 times your salary by age 67. And it really is unique to each person. So working with a financial professional can help you get a clearer picture of your number and help you create a plan to help you reach that.
And then we also want to acknowledge that you may not hit every single one of these on this chart. So some of you may even be past some of those milestones. And that's OK. This is just a guide. And the most important thing is to start today, right after this call if you can, and get started.
ALEX ROCA: Now, Sasha, Vanessa mentioned some of the factors that can play into that magic number, and one of them being our predicted expenses. How can someone estimate that for retirement?
SASHA HEATHMAN: So this can be an overwhelming task, trying to predict the future and how much things might cost. And Vanessa mentioned the image that came to her mind was farm animals. And I mean, how do we estimate what that costs? So to keep it easy when we're planning for how much things might cost in retirement, start with what you know to be true today. You know how you spend money now and where those costs go.
So when we're trying to estimate what your magic number is, step number 1 is just to outline where your money is going. And you want to find all of the dollars. And what I mean by that is those credit card bills, even though we pay them off every month, that is still spending. So we want to make sure that we include those when we are making our initial assessment of what we're spending.
So from there, once where our money is going, then the second part of that is we can start thinking about how those expenses and spendings might shift when we're in retirement. So maybe your mortgage will be paid off, or your student loans will be paid off. Maybe your kids will be out of the house.
So some expenses in those categories might go down, but they also might just shift to other priorities. So maybe you're not paying for your kids, but maybe you want to spoil your grandkids. Or if your mortgage is paid off, maybe that allows you to take a couple of more trips throughout the year. So your lifestyle goals are really what makes your magic number so unique.
And you don't have to all the answers. That guideline is there to just give you an idea of how to start planning for costs. But it's really to, again, help you plan more successfully, because whatever your situation is now, it will inevitably change in some way during retirement. So we have to think about money, both how we need it now and how we might need it in the future.
So once what our expenses are, our spending habits, and we think about how those expenses might shift in retirement, then we can take it a step further and categorize those expenses. So our three categories are essentials, discretionary, and unexpected. So essentials—think housing, food, health care, internet, taxes, all the fun stuff. No, just kidding. It's the non-negotiables. And if going on at least one girls' trip a year or a big vacation each year—if that is non-negotiable for you, that is part of the essential category.
Then when we look at the discretionary, that's where we can think about the extra fun things—so going shopping, getting caught up in the Target dollar section—I'm guilty of that—going out to eat. Maybe you're hosting dinner parties or book club parties. So discretionary is the category where, if push came to shove, you are OK with maybe cutting back.
And then finally, our third category is planning for the unexpected. And that's where the emergency fund comes in. And that always needs to exist, both now and in retirement. So by understanding how we spend money, then that can help us better, again, find that magic number for you, specifically, how much you need to have saved so that your journey is more personal and unique to your situation.
ALEX ROCA: Oh, that's perfect. And I appreciate both of you having said already, everybody's situation is different, and it can depend on so many different factors what your plan ultimately looks like, what your budget ultimately looks like. It's going to depend on things like where you're living or what you plan on doing in retirement. So thank you for calling that out.
Now, let's get into today's main event. The name of this webinar, which is "Six actionable steps that we can take to help us max out our retirement savings and make sure that we're saving enough--" one callout is not every step may apply to your individual situation. And if that's the case, that's OK. Move on to the next. But these steps are going to give you a really good framework to build off of. So, Vanessa, can you walk us through what step 1 is on our savings hierarchy?
VANESSA LE: Yeah, of course. So I do want to start by saying that strategies can change based on different goals. But today, like you said, Alex, we're talking about a plan to help save and invest for retirement. If you're planning for other goals, that hierarchy might be a little bit different. So when you think about saving for retirement, the first thing that often comes to mind is saving through an employer's workplace savings plan, like a 401(k) or a 403(b).
If you have that option, step 1 is to make sure that you open and start contributing to your plan up to what's referred to as an employer match, If that applies. Meaning, if you put money into that account, so will your employer, up to a certain amount or a certain percent. And that's basically free money towards your retirement goal. And keep in mind, not all employers offer a match, so you'll want to double check.
It's also important to find out how long you need to work at that company to keep the money that they match. This is often referred to as vesting. But to be clear, any money that you put in to that workplace retirement savings plan is yours to keep. But you may need to stay at the company a specific amount of time to keep that money that the company contributes. So once their contribution vests, it's yours forever. And Fidelity believes that you should contribute at least enough to your employer plan in order to get the full company match. You don't want to leave part of your compensation on the table.
ALEX ROCA: Absolutely. And, Sasha, what if you're already hitting the company match, or you don't have access to an employer-based retirement plan, then what are your options?
SASHA HEATHMAN: Sure. So I'll start with, if you don't have access to an employer plan with a company match, then you can still save for retirement. And we'll touch on that in one of the next steps. But if you do have a workplace retirement plan with an employer match, then step number 2 is to open and fund a Health Savings Account, or HSA. Remember, we mentioned earlier that health care is one of the biggest expenses that women are going to face. So having a bucket of money saved specifically for that is why the HSA is such an important part of this list.
Now, a detail to note about HSAs is that in order to contribute to one, you must be enrolled in an HSA-eligible health plan. Now, an HSA offers a lot of benefits. So specifically, you can save and invest specifically for future qualified medical expenses, both today and in the future. Fidelity has even estimated that a 65-year-old retiring might need about $172,000 in after-tax money just to pay for health care expenses in retirement. So it's quite an expense. And having a plan to pay for that is why these HSAs are so powerful.
So these accounts, we do call them triple-tax advantaged, which means that you can contribute to them and deduct those contributions from your taxable income each year. Additionally, the contributions—should you decide to invest that money, you can have growth potential that's also tax-free, especially when you spend it on qualified medical expenses. And then lastly, when you are spending the money on those qualified medical expenses, you don't owe any federal income taxes. And having a dollar that you don't owe income taxes on really allows that dollar to stretch a lot further.
So another benefit of the HSA is that you can accumulate it year to year. It's not use it or lose it like other flexible spending accounts are. And sometimes your employer may also make a contribution to the account. So be sure to take advantage of that employer benefit if it's an option for you.
ALEX ROCA: Sasha, I actually have a quick follow-up for you. What if your employer doesn't offer an HSA? Is there still a way for you to open this type of account?
SASHA HEATHMAN: Why yes you can Alex. You can open an HSA on your own. The only requirement is that you are enrolled in an HSA-eligible health plan. We actually offer HSAs here at Fidelity, and we're happy to review those options with you.
ALEX ROCA: Vanessa, we're on to step 3. So after capturing our employer match and establishing an HSA, what's next on our hierarchy?
VANESSA LE: We're actually going to come back to that employer retirement account, your 401(k) or your 403(b), and consider maxing it out. So there's usually a limit on how much you can contribute to each type of account. And that amount usually increases year over year to keep up with inflation and rising costs.
If you're over the age of 50, there are also catch-up contribution opportunities, allowing you to add even more to help give your retirement savings an even bigger boost as you get closer to retirement. If you can't afford to go up to the maximum yet, that's OK. Fidelity suggests aiming to save 15% of your pre-tax salary, including your employer's contributions. And if that feels too high right now, that's OK too. Contribute what you can, and then commit to increasing those contributions by even just 1% on a regular basis.
Some employers offer an auto-increase program, so you can just set it and forget it. And we want to show you a visual of how 1% can really make a difference over time. But we also that not everyone has the opportunity to start as early as in the example that you are seeing. So I want to share one more that shows the impact of someone starting a little later. And you can see how much of a difference just 1% each year can still make.
ALEX ROCA: That's such a powerful image. Especially, Vanessa, I appreciate you sharing, hey, if you're just starting out and you're 25, and I get not everybody can start there. So sometimes you start at 45, and you can still see the impact of that 1%. I know that myself, when I was out on the field helping participants, I would help them over many years.
And I actually saw the reaction of people who would set up the automatic 1% increase. They typically forgot they set it up, didn't realize when it actually took effect. And then when it actually a few years went by and we were revisiting their plan and revisiting their balance, they'd fall off their chair, shocked at how much they had increased their balance in just a short amount of time. And so that 1% doesn't feel like a lot, but it can make a huge difference.
I also want to just take a minute here and acknowledge people who don't necessarily have employer work plans. Maybe you're self-employed, or maybe your employer just doesn't offer a workplace plan just yet—those 401(k)s and 403(b)s that Vanessa was talking about. This hierarchy is just a guideline. And if at any time a step does not pertain to you or your unique situation, like I said earlier, just go on to the next one until you find a step that works for you. So keep in that same order, but just until the next one that makes sense for your plan.
So for example, if you don't have an employer retirement plan, or maybe you're not eligible for an HSA, this next step may be your first step. And that's OK. So, Sasha, to that point, what's our step 4? And how can it specifically help individuals that don't have access to employer retirement plans or even HSAs?
SASHA HEATHMAN: Sure. So there's no right size fits all when it comes to financial planning and then specifically preparing for retirement. So, Alex, to reiterate something that you said is, if, in this hierarchy, if one of the steps is not applicable to you, no problem. Just move on to the next step, because here we are in step number 4. But if you don't have access to an employer plan, or you're not eligible for a health savings account, then step number 4, this might be your step number 1. And that's great too.
The most important part is that you are creating a plan to accomplish the retirement vision that you imagined earlier and that you keep putting your money to work.
So let's talk about step number 4, which is all about Individual Retirement Accounts, or IRAs. Now, these are powerful accounts because they are not connected to any specific employer. So if you are your own employer, then, again, this might be your step number 1. If you do have an employer plan, like a 403(b) or a 401(k), then, yes, can also contribute to an IRA in addition to the plan you already have. And as Vanessa mentioned earlier about vesting, contributions that you make to an IRA are always 100% yours.
Now, there are several IRA options to choose from with different benefits, requirements, and contribution limits. So for individuals, you can contribute to a Roth IRA or a traditional IRA. The difference is going to be when taxes are collected on your savings. And even though I presented that as this or that, it could also be a combination of the two. The limit is still the same. But I wanted you to know that there are two distinctions there—Roth and traditional—and it does have to do with when you're taxed on the savings.
Another type of IRA is also called a rollover IRA, which is the same as a traditional IRA. It just specifically lets the IRS know that the money that's in that account came from a previous employer's retirement plan, and it hasn't been taxed yet. Now, if you are a small business owner or self-employed, then there are also some small business IRAs, like SEP IRAs, SIMPLE IRAs. You could also consider a solo 401(k) that can not only help you save for retirement, but also potentially reduce your taxable income. So these accounts are all beneficial because they often have higher contribution limits than your regular traditional or Roth IRAs. So working with a financial professional, we can help you decide which IRA may work best for you and your retirement journey.
VANESSA LE: Yeah, I'm going to jump in here too and add in—so I want to call out that if you do decide that an IRA is right for you, I just want to make a note that your contributions are not automatically invested, just like the HSA that Sasha mentioned earlier, because we've heard stories about people thinking that they were done after they opened the account and they contributed to it. And they didn't realize that they actually needed to invest their contributions so that it could potentially grow over time.
So think of the IRA as just an empty container, and you're putting your contribution in there. We still have to invest that money to make it work for you.
And just last week, my cousin asked, what kind of IRA gives me the highest returns? And so I had explained this concept to her. So when you open up an IRA, you'll have the option within the account where you can choose to open the account, and then you can make your contribution.
And then you can also choose to manage your own investments, or you can choose to open an account where professionals will manage those investments on your behalf.
And if you do choose to manage the investments on your own, make sure that you don't skip or forget this step. And with each contribution that you make year after year, you're going to want to make sure that those contributions get invested.
ALEX ROCA: Excellent. So, Vanessa, kind of a two parter here. Let's start with the first. Keeping in this topic, can you quickly talk a little bit more about the IRA options and what the differences are? Let's start there.
VANESSA LE: Of course. So let's start with the rollover IRA because that's the one that you may not be as familiar with. And it's related to your workplace plan, kind of. So the rollover IRA's biggest job is to help you keep track of old employer plans. It's an account where you can roll all of your old 401(k) plans into and consolidate them. And it's important to note that the money that you roll into this IRA doesn't count towards the yearly contributions, because these are contributions from plans that you've already made.
And one more thing to note is that a lot of people don't realize that you can also contribute additional funds into a rollover IRA. But while you can do that, it does limit what you can do within the account. And it also adds some extra steps as far as record keeping. So you want to make sure that you're considering all of your options, and you're talking with a financial professional if you're unsure about anything.
ALEX ROCA: Thank you for that, Vanessa. And then what about the traditional and Roth IRAs?
VANESSA LE: Yep. So we're going to pull up a slide for this one. For the Roth and the traditional IRA, there are several differences, but the main one is how and when your contributions are taxed. So the Roth IRA accepts after-tax money.
And that means that the taxes on your contributions have already been taken out, and then the earnings on those contributions and the withdrawals are going to be tax-free in retirement, provided you meet certain requirements. And the contributions—keep in mind they don't decrease your taxable income because you've already paid taxes on them. And they're going to be growing tax-deferred and will be tax-free after certain requirements are met.
For the traditional IRA, you may be eligible to make tax-deductible contributions. So that money, you are making contributions with after-tax dollars, and then they may or may not be tax-deductible. And then you're going to invest it. It's going to grow. And then the earnings are going to be taxable when you take the contribution out or you take a withdrawal out unless there's an exception to the withdrawal.
But something to consider when deciding which type of IRA to open is what tax bracket you'll be in during retirement. Will you be in a higher or lower tax bracket than you are right now? And there's no right or wrong answer. And if you're unsure, you can always call us or fill out the form. And we're happy to help you walk through all of your options.
ALEX ROCA: Now, back to our steps. Let's say somebody has already done everything on this list so far. What would they want to focus on next, Sasha?
SASHA HEATHMAN: Well, kudos to you for getting all the way up the hierarchy. And also, I know Vanessa talked through a lot of tax distinctions of these accounts, and it might feel overwhelming. But I always want to remind you that why any of these decisions matter is because we're trying to make that retirement vision a reality. And managing your tax liability, both now and in the future, is definitely a component that we want to incorporate in the planning process.
So to look at our steps, this is one step that many people may not know about. And it's because it varies from employer to employer. So if you do not have access to a workplace retirement plan, or if you do actually have access to a workplace retirement plan, then you might have the ability to contribute beyond the individual limits.
So specifically, some employer plans allow you to contribute money in three ways. One is called pre-tax contributions, which simply means that you pay taxes later in retirement, and you can have a tax deduction now. You could also contribute Roth dollars, which means that you pay taxes on the money now and then not again in retirement. And then, if applicable, there could be a third option for how you can save money in your workplace plan. And that is called an after-tax contribution.
Please note that Roth and after-tax have similar but different meanings so check with your employer plan first to see if after-tax is a possibility, and then we'll be able to help talk you through what those benefits are. We'll also put a link in the chat that talks in more detail about after-tax But the first step is see if it's an option. And again, that's another great way to maximize your retirement savings.
But while we're here, I will talk about a few of the details of after-tax. So you might even have the option to convert those after-tax dollars to Roth inside of your employer plan. This is sometimes referred to as a mega backdoor Roth, because it allows you to maximize that tax-free growth potential for retirement.
Now, specifically, after-tax contributions—they can be withdrawn without taxes or penalties. That's your contribution. However, if you are not able to convert those after-tax contributions to Roth, then the earnings on those after-tax contributions are considered pre-tax, which, remember, Vanessa, outlined this earlier that pre-tax simply means that you would pay taxes later in retirement. And those earnings are also subject to that 10% penalty if you are under the age of 59 and a half. So that's after-tax, which could be a feature of your employer workplace plan.
And another potential employer-sponsored plan that you might have access to is called deferred compensation. Now, this is only offered by some employers, not all. And there is certain eligibility criteria. So if it is offered and you are eligible, then deferred compensation can allow you to save money and defer taxes on that portion of your salary until a future date.
So if you are considering this step and you're not sure if it's right for you, then let's talk about it. A financial professional can help you understand all your options, the potential tax implications, and then, most importantly, how saving in these different types of accounts can help you reach your goals.
ALEX ROCA: Now, before we get to our last step, I want to revisit something that both of you had said at some point today, which is this idea of catching up, things like catch-up contributions. While this isn't necessarily its own step, Vanessa, can you talk a little bit about what catch-up contributions are and where and when these opportunities could potentially come into play for somebody?
VANESSA LE: Sure. So catch-up contributions are a way for those that are closer to retirement to save a little bit more. We meet with people a lot of the time where they'll say, I feel like I have a lot of catching up to do. So this is an opportunity where you can--depending on the type of account that you're looking at, there are four ways that additional catch-up contributions can take place.
So as you see on the slide here, we have catch-up contributions that you can make into a 401(k) or 403(b) plan. So these are going to be your work/employer-sponsored plans. And there's one limit for age 50 to 59, and then 64 and up. And then if you're between 60 to 63, your plan may allow a different amount for catch-up. And it's all laid out on the slide here.
And then for HSAs, your catch-up contributions don't take into effect until you're 55 and up. And then there are catch-up contribution opportunities for traditional or Roth IRAs as well as SIMPLE IRAs. So the SECURE Act 2.0 added the ability to do the super catch-up for a few certain years, which is what you see on some of those bullet points on the slide for—looks like the 401(k)s and then the SIMPLE IRAs.
So this is an optional offering that may or may not be offered by your employer. So be sure to understand what your employer actually allows within the plan. And then, also, with high-income earners—so there's a mandate as of this year that if you're 50 or older and your taxable earnings are $150,000 or more, any catch-up contributions to your employer-sponsored plan will have to be made into the Roth 401(k) with after-tax dollars. And that rule is based on the prior-year W-2 from the employer sponsoring that plan.
So that means if you earned $150,000 or more for 2025, the change applies to you for the 2026 tax year. Now, if your plan doesn't offer a Roth 401(k) option, you won't be able to make those catch-up contributions. And some limits increase year over year due to inflation and the cost-of-living adjustments. So always check and confirm your limits. And this is where a financial professional can help you make sure that you are maximizing your contributions for that year.
ALEX ROCA: Now that we've made it to our final step, Sasha, bring us home. What's step number 6 on our list?
SASHA HEATHMAN: Sure. So one thing I want to mention, or I want to bring back up--because Vanessa mentioned it earlier—this hierarchy today is specifically for retirement planning, which, by itself, is a very specific goal with specific strategies to accomplish it. And so once you've done all of these steps or as many as you are eligible for, then our final step is to consider investing any extra money in a general brokerage account.
Now, the tax benefits won't be the same as the other accounts that we've talked about, but you'll still have the potential for long-term growth. And as a bonus, you do have access to the money if you need it before retirement without concern for penalties.
There's also not any contribution limits to how much you can save and invest in a brokerage account, so you can use it to keep moving you forward in your wealth-building journey.
ALEX ROCA: Thank you for that, Sasha. So that was our six steps in order to help with tax efficiency. But I want to shift gears just a little and quickly talk about what to do when retirement is knocking on our door. So, Vanessa, how can we prepare to live in retirement? And when should we start thinking about that?
VANESSA LE: All right, so we're bringing it full circle—everyone's magic number, meaning what you'll need to live comfortably in retirement. Remember, that's going to be different for every person because you're going to have very specific goals and very unique situations. And remember that those essential and discretionary expenses that Sasha talked about earlier—you're going to want to keep that in mind as you're planning for retirement. And you can use those to help create what's called your retirement income plan.
So basically, we'll need to recreate that replacement paycheck that we're so used to getting each week or every other week from the sources of income that you're currently getting. And you're going to create a retirement income plan based off of what you've saved, and then also through your guaranteed income streams, such as if you have a pension or through Social Security.
And we're going to need to shift our mindset from saving, saving, saving to spending, spending, spending, which I think would be a fun mindset shift for some people. I know I'm excited to be able to do that. But it can be very difficult, especially if you've just been in that work mode and save mode for a very long time and just thinking about, what do we now need to plan to spend our money on? And thinking about those things is going to help determine how much you might need. So remember, it's going to be very specific and unique to every person. It's going to be very different.
And then as far as when to start thinking about it and planning—so it's never too early to think and dream about retirement. But roughly five years or less can be a good time to start planning out these numbers and thinking about your expenses and then start finalizing that plan and working with a professional to create that retirement income plan.
We want to avoid creating a plan too early, since it may not accurately reflect the current economic state, or it might not be an accurate picture of how much you've saved so far. And this also might be a good time frame for you to start thinking about Medicare and any other considerations, like your estate plan required minimum distributions and then long-term care planning. And those are just some of the options, just to name a few out there for you to consider.
ALEX ROCA: I appreciate you going over that, Vanessa. Retirement can not only be a financial change, but an emotional and a mental one as well. So it's super, super important to be as prepared as possible. Now, we're almost up on time, so I have a really quick question, Sasha, for you because I think it's important to cover this. How can we make sure that we're ready in case something does happen and we retire before we originally planned? If you can give me that answer quickly.
SASHA HEATHMAN: Yeah. So life happens. And feeling prepared for the unexpected is one of the biggest reasons to have a financial plan in place so that if life presents a speed bump, then you can more seamlessly pivot in another direction while still getting to your ultimate destination of financial security. And you're not alone in figuring it out. That's what Fidelity planners are here to support you through.
ALEX ROCA: Excellent. Sasha, Vanessa, thank you so much for sharing all of this information with us today. We have a slide that we're going to pull up that will give you access to all of our upcoming events. That's a wrap. Sasha, Vanessa, thank you again. And to all of you watching, thanks for joining, and we'll see you next time. Have a great day.