Knowing how to plan for retirement can help turn a distant goal into a realistic plan. From setting savings targets and choosing tax-advantaged accounts to building future income, these steps can help you prepare for the years ahead, no matter where you are on your financial journey.
How to plan for retirement at every age
Having a vision can help you set a concrete goal for retirement. Once you’ve considered how you want to spend your time and where you want to live, you’ll have a better sense of what your retirement could cost. Your estimated expenses in retirement and how many years your savings will need to provide income will help you set your savings goal.
Consider these questions to start visualizing yourself in retirement.
- What are you retiring to?
- What do you want to do in retirement?
- How does retirement fit in with the rest of your goals?
- Are you on track to hit your retirement goals?
Read Viewpoints: Boost your odds of a successful retirement
Retirement planning in your 20s
Focus on saving as much as you can in tax-advantaged accounts and investing for growth potential.
How much should you have saved for retirement in your 20s? Aim to save an amount equal to your annual salary by age 30.1 To learn more about Fidelity's savings factors, read: How much do I need to retire?
Take advantage of time and the potential of compounding growth. When it comes to long-term saving, time can be one of your greatest advantages. The earlier you begin saving and investing, the lower your savings rate can be throughout your career thanks to the power of compounding.
Saving for retirement in your 20s can potentially compound over time
Make the most of savings with tax-advantaged accounts. At this life stage, money can be scarce, but saving and investing what you can in a tax-advantaged account will pay off later in life. After all, the less you pay in taxes, the more potential you have to grow that money. Examples of tax-advantaged accounts include:
- IRAs
- Workplace savings plans like 401(k)s or 403(b)s
- Health savings accounts (HSAs)
Your HSA, if you have one, can be a particularly powerful savings vehicle for retirement due to its triple tax advantage: Contributions are made on a pre-tax basis, or you may be able to deduct contributions you make outside of payroll, investments in the account have tax-free growth potential, and withdrawals are tax-free when used for qualified medical expenses now or in retirement.2
Read Viewpoints: 5 ways HSAs can help with your retirement
Decide how much you can save for retirement: Fidelity suggests saving 15% of your income annually, including any match you get from your employer. This assumes you start saving at age 25 and plan to retire at age 67.3
If 15% is too much, start where you can. If you get a match from your employer, aim to contribute enough to get the entire match and then increase your contribution rate each year until you get to 15%.
Investing for long-term growth potential. Over the long term, stocks have historically had higher returns than bonds or cash. In your 20s, consider investing in a diversified mix of investments with a significant portion devoted to stocks. Investors with many years before retirement have time to ride out the ups and downs in the market, and the potential compounding and growth that stocks can provide may help you reach your retirement goals. But balancing the growth potential of stocks with your own ability to tolerate risk is critical to staying invested for the long term.
Diversification, or spreading your investing dollars across several types of investments (generally stocks, bonds, and short-term investments), may not boost performance—it won’t ensure gains or guarantee against losses—but it has the potential to improve returns for the level of risk you’re targeting.
How does it do that? By possibly smoothing out the ride and providing some cushion against the big swings that can happen in the stock market. As you approach retirement, it can be a good idea to reduce the percentage of your portfolio invested in stocks and increase the percentage invested in bonds and short-term investments.
Another way to diversify when you’re investing for retirement could be with a target date fund. Target date funds provide a diversified mix of investments in one fund that gradually shifts to a more conservative mix as the target date nears, and beyond.
Learn about Fidelity's target date funds, Fidelity Freedom® Funds.
Read Viewpoints: Investing ideas for your IRA
Retirement planning in your 30s and 40s
Focus on amping up savings in tax-advantaged accounts and continuing to invest for long-term growth potential.
How much should you have saved for retirement in your 30s and 40s? Aim to save 3 times (3x) your annual salary by age 40 and 4x by age 45.1
Here are some tips that can help you work toward those savings goals.
- Try to ramp up your savings. This is a busy time of life for many people, but it's also a time when your income may be on the rise. If you're not saving as much as you'd like or may need, try increasing your contributions each year when you can. For example, if you get a bonus or a raise, consider dedicating at least a part of it to retirement savings.
- Find more tax-advantaged ways to save. Try to save as much as you can in tax-advantaged accounts like a 401(k), IRA, and HSA.
If your company offers stock options or nonqualified deferred compensation plans, they could also be a way to help supercharge your savings if you've maxed out your other retirement accounts.
Read Viewpoints on Fidelity.com: Make the most of company stock in your 401(k) and The basics of nonqualified deferred compensation
- Consider a Roth conversion if it makes sense for your situation. If most of your retirement savings is held in traditional pretax accounts, such as IRAs and 401(k)s, it can sometimes make sense to convert some of the money into a Roth IRA and/or Roth 401(k). Years when your income is lower may be a good time to consider a conversion because the converted amount is generally subject to income taxes. But qualified withdrawals in retirement are tax-free, giving you more flexibility to reduce your overall tax bill in retirement. There are many considerations before doing a Roth conversion, including your current and future tax brackets.
Read Viewpoints: Do you earn too much for a Roth IRA? and Backdoor Roth IRA: Is it right for you?
It's best to speak with a tax professional to understand if and when this strategy could be good for you.
- Continue investing for potential long-term growth. With a decade or more before you are likely to retire, you may want to keep the majority of your retirement portfolio in a diversified stock portfolio.
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To learn more, read Viewpoints: Retirement playbook: What to consider in your 40s
Retirement planning in your 50s and 60s
Focus on catching up with savings, diversifying investments, and considering retirement income.
How much should you have saved for retirement in your 50s? Aim to save 6 times (6x) your annual salary by age 50 and 8x by age 60.1
Use catch-up contributions. People age 50 and older can take advantage of catch-up contributions to their retirement accounts, such as IRAs, HSAs, and 401(k)s.
To learn more, read Viewpoints: Retirement playbook: What to consider in your 50s
Diversify your investments. As you approach retirement, you may want to add more stability to your portfolio by balancing stocks’ long-term growth potential with the income and relative stability that bonds can provide. Your investment mix should continue to reflect your goals, time horizon, financial situation, and risk tolerance.
How much should you have saved for retirement by age 67? Aim to save 10 times (10x) your annual salary by age 67 if that is the age you plan to retire.1
To learn more, read Viewpoints: Retirement playbook: What to consider in your 60s
Contribution limits on tax-advantaged accounts
The contribution limits for tax-advantaged accounts are indexed to inflation and may be adjusted annually.IRA contribution limits
The annual contribution limit for IRAs, including Roth and traditional IRAs, is $7,500 for 2026. If you're age 50 or older, you can contribute an additional $1,100 for 2026.
HSA contribution limits
For 2026, the IRS contribution limit for a health savings account (HSA) is $4,400 if you have individual health coverage, and $8,750 if you have family coverage, in an HSA-eligible health plan. The HSA contribution limits for 2027 are $4,500 for individual coverage and $9,000 for family coverage. Any employer contributions will count toward these limits.
If you're 55 or older during the tax year, you may be able to make a catch-up contribution, up to $1,000 per year. Your spouse, if age 55 or older, could also make a catch-up contribution, but will need to open their own HSA. See IRS Publication 969 for more on annual HSA contribution limits.
401(k) contribution limits
In 2026, you can contribute up to $24,500 pre-tax or Roth to your 401(k). Some plans may allow after-tax contributions up to the combined employee and employer limit of $72,000. If you're at least age 50 at the end of the calendar year, you can add a pre-tax or Roth catch-up contribution of $8,000 (or $11,250 if age 60–63, if your plan allows).
According to the SECURE 2.0 Act's higher earner rule, in 2026, catch-up contributions for earners whose FICA wages (typically Box 3 of Form W-2) exceed $150,000 in the previous tax year, must be designated as Roth after-tax contributions.
If your employer's plan does not offer a Roth contribution feature and you fall under the high-earner rule, you won't be able to make catch-up contributions to that plan.
If you have a workplace savings plan, you may be able to make after-tax contributions to bolster your savings.
Read Viewpoints: What to do with after-tax 401(k) contributions
Turning retirement savings into retirement income
Having an income plan in place before you retire can help you avoid surprises. For most people, Social Security and any pensions they have will provide an income base in retirement, with the rest coming from savings.
To start building your retirement income plan, consider these 4 steps:
- Identify your sources of predictable income. Start with any income you expect from Social Security, pensions, or annuities. These sources can help cover essential expenses such as housing, food, insurance, and health care.
To help cover essential expenses that aren't met by Social Security or a pension, you may want to use some of your retirement savings to purchase an income annuity.4
Read Viewpoints: How to feel financially secure in retirement
- Determine how much income your savings will need to provide. After estimating your predictable income, compare it with your expected spending. Any gap may need to be covered by withdrawals from your retirement savings. Fidelity estimates that many people may need savings to replace at least 45% of their preretirement income, after accounting for Social Security and pensions.5
- Figure out how much you can withdraw from savings annually. As a general guideline, consider withdrawing no more than 4% to 5% of your savings in the first year of retirement, then adjusting that amount annually for inflation.6
- Invest for growth potential and stay flexible. Even in retirement, a portion of your portfolio may need growth potential to help support future spending, keep pace with inflation, and meet legacy goals. Review your plan regularly and adjust as your expenses, health care needs, tax situation, and goals evolve over time.
Read Viewpoints: 3 keys to your retirement income plan
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Get help making informed decisions about retirement by answering a few questions in this comprehensive guide covering Social Security, cash flow, investing, Medicare, and more: Retirement Decision Guide
3 hidden traps that can trip up your retirement plan
A strong retirement plan should cover income needs and consider future health care expenses, inflation, and taxes and required minimum distributions from retirement accounts.
On average, according to the 2026 Fidelity Retiree Health Care Cost Estimate, a 65-year-old individual may need $185,500 in after-tax savings to cover health care expenses in retirement.
Here are 3 often over-looked issues to consider.
- Managing health care costs: Retirement planning conversations should account for the impact long-term care costs have on individuals and their families.
- Look for ways to beat inflation: Social Security and certain pensions and annuities help keep up with inflation through annual cost-of-living adjustments or market-related performance. Additionally, choosing investments that have the potential to help keep pace with inflation, such as growth-oriented investments (e.g., stocks or stock mutual funds), Treasury Inflation-Protected Securities (TIPS), real estate securities,7 and commodities,8 may make sense to include as part of an age-appropriate, diversified portfolio.
- Be aware of required minimum distributions (RMDs): Certain retirement accounts require you to take minimum distributions starting at age 73. The RMD age will increase again to 75 in 2033. Accounts subject to RMDs include traditional IRAs; 401(k) and 403(b) plans; and SIMPLE and SEP IRAs. The annual deadline is December 31, but you may delay taking your first RMD up until April 1 of the year after you turn 73.9 It's important to know, however, that if you choose to wait until April 1 for your first RMD, it will mean taking 2 RMDs that year—one in April and one by the December 31 deadline. That additional income could have tax consequences for you. Read Viewpoints: 6 retirement tax moves most people miss.
The bottom line on planning for retirement
Successfully saving and investing for retirement is a lifelong journey. Sometimes the going will be easy and sometimes it may seem tougher. A clear sense of purpose can help you stick with it consistently through good times and bad.
Whether your retirement vision is detailed or still taking shape, consistently making it a financial priority can help bring it within reach.