September 2024 (updated March 2026)
Retirement planning is one of those things most people know they should be doing, and far fewer are doing well. Not because they lack ambition or discipline, but because the conventional advice tends to flatten a genuinely complex challenge into a handful of rules that do not account for your actual life.
Contribute to your 401(k). Diversify. Retire at 65. These are starting points, not strategies.
The clients who arrive at retirement with clarity and confidence did not get there by following a checklist. They got there by building a plan that connected the decisions they were making in their 40s and 50s to the life they actually wanted in their 60s and beyond, and by revisiting that plan as circumstances changed.
This article covers the core elements of retirement planning done well: what to assess, how to save more effectively, how to think about income, and why the tax dimension of retirement is often where the most meaningful work happens.
Start with the Picture, Not the Numbers
Before reviewing contribution limits or withdrawal strategies, the more important question is: what are you actually planning for?
Retirement looks different for everyone. Some clients want to stop working entirely at 62. Others want to shift gradually into consulting or part-time work through their late 60s. Some prioritize travel. Others are most focused on leaving something meaningful to children or grandchildren. Many are carrying a combination of all of these.
Your financial plan needs to reflect your picture, not a generic projection. That means thinking through:
- When you want to stop working, or significantly change how you work
- What monthly income you will need to maintain your lifestyle
- What role healthcare will play, particularly if you retire before Medicare eligibility at 65
- Whether legacy planning, charitable giving, or family support is part of your vision
- How you want to spend your time, and what that costs
Once that picture is clear, you can build backward to a savings target, a timeline, and an income strategy. Without it, you are optimizing for numbers that may not serve you.
Building Your Savings Foundation
For most people, retirement savings flows through three types of accounts, each with different tax treatment: tax-deferred accounts like traditional 401(k)s and IRAs, tax-free accounts like Roth IRAs and Roth 401(k)s, and taxable brokerage accounts. How you allocate across these buckets has real long-term consequences, not just for growth but for your tax bill in retirement.
Maximize Tax-Advantaged Accounts First
For 2026, employees can contribute up to $24,500 to a 401(k), 403(b), or similar workplace plan. Those 50 and older can add a catch-up contribution of $8,000, bringing the total to $32,500. SECURE 2.0 created an enhanced catch-up opportunity for savers ages 60 through 63: the catch-up limit for that group is $11,250 rather than $8,000, for a potential total of $35,750.
IRA contribution limits for 2026 are $7,500 per person, with an additional $1,100 catch-up for those 50 and older. These limits apply to both traditional and Roth IRAs, though Roth contributions phase out for higher earners (between $153,000 and $168,000 for single filers; between $242,000 and $252,000 for married filers in 2026).
If your income exceeds Roth IRA eligibility thresholds, a backdoor Roth conversion may be worth exploring. For a full breakdown of conversion strategy and timing, see Is a Roth Conversion Right for You?.
Capture the Employer Match First
If your employer offers a 401(k) match, contributing at least enough to capture the full match is the highest-return, lowest-risk move available to you in savings. Leaving it on the table is leaving a portion of your compensation behind.
Think in Buckets, Not Just Balance
A retirement savings strategy is not just about accumulating a large number. It is about building a mix of accounts, tax-deferred, tax-free, and taxable, that gives you flexibility to manage your tax liability in retirement. The ability to draw from different buckets in different proportions is one of the primary tools available for keeping your taxable income lower and your net income higher. For a detailed look at how asset placement interacts with withdrawal strategy, see Asset Location and Tax-Efficient Withdrawal Sequencing in Retirement.
Social Security: More Strategy Than People Realize
Social Security timing is one of the most consequential decisions in retirement planning, and one of the most commonly misunderstood.
Benefits are available as early as age 62, but claiming early permanently reduces your monthly payment. For most people born in 1960 or later, full retirement age is 67. Waiting beyond full retirement age increases your benefit by 8% per year, up to age 70. That difference compounds over a long retirement.
The right claiming strategy depends on your health and life expectancy, whether you have a spouse and how your combined benefits interact, your other sources of income in the years before you claim, and the tax treatment of your Social Security benefits in the context of your overall income. For a deeper look at how the bridge strategy works and why delaying often pays, see The Social Security Bridge Strategy: How to Maximize Lifetime Income by Delaying Benefits.
On the tax side: up to 85% of Social Security benefits can be subject to federal income tax, depending on your combined income. How and when you claim, and what other income you are drawing simultaneously, affects both your benefit amount and how much of it you keep. See How to Reduce Taxes on Your Social Security Benefits for strategies that address this directly.
Retirement Income: Building a Plan That Lasts
Accumulation is one challenge. Distribution is another. Many people spend decades saving without ever developing a clear picture of how they will actually draw down those savings in a tax-efficient, sustainable way.
Withdrawal Sequencing
The order in which you draw from different accounts matters significantly for your lifetime tax liability. Drawing from taxable accounts first, then tax-deferred accounts, then Roth accounts is a common starting framework, but the right sequencing depends on your specific bracket situation, your RMD timeline, and whether there are Roth conversion opportunities worth capturing in early retirement years. For a comprehensive treatment of this topic, see Asset Location and Tax-Efficient Withdrawal Sequencing in Retirement.
Required minimum distributions begin at age 73 for most account types under current law. For those with large tax-deferred balances, RMDs can push taxable income substantially higher than anticipated, affecting Social Security taxation, Medicare premiums (IRMAA), and overall tax efficiency. Planning around this well before age 73 is where thoughtful advisors can add real value.
Diversifying Income Sources
Retirement income stability comes from having multiple sources that do not all move in the same direction at the same time. A well-structured retirement income plan typically draws from some combination of Social Security, portfolio withdrawals coordinated across account types, and potentially rental income, part-time work, a pension, or other guaranteed income.
If you have a pension, the tax decisions around your first payments deserve careful attention. See Tax Traps to Avoid When Taking Your First Pension Payments for common mistakes and how to avoid them.
The goal is not just to have enough in total, but to structure income so that a bad market year does not force you to sell investments at a loss to meet living expenses. Having one to three years of living expenses in accessible, lower-volatility accounts creates a buffer that allows the rest of the portfolio to stay invested through downturns.
Flexible Withdrawal Strategies
Static rules like the 4% withdrawal guideline can be useful anchors, but they are not instructions. A dynamic strategy that adjusts based on market performance, changes in spending needs, and tax conditions tends to be more effective over a 20- to 30-year retirement. For a practical guide to building a sustainable income stream, see How to Turn Your Retirement Savings Into a Flexible Income Stream.
The Tax Dimension of Retirement Planning
Tax planning in retirement is not a separate activity from retirement income planning. They are the same activity.
How much you pay in taxes over a 30-year retirement is shaped by decisions made well before you retire: the account types you contributed to, when you began Roth conversions, how you have positioned your investment portfolio, and when and how you claim Social Security.
A few areas where proactive planning tends to have the most impact:
- Roth conversions in lower-income years before RMDs begin. See Is a Roth Conversion Right for You? and Leaving a Tax-Free Legacy: How Roth Conversions Benefit Your Heirs for the full picture across both personal and estate implications
- Medicare premium planning, since income above IRMAA thresholds triggers premium surcharges that can add thousands in annual costs. Our Retirement Tax Planning service addresses this directly
- Qualified charitable distributions (QCDs) for those with charitable intent, allowing IRA distributions to go directly to charity tax-free starting at age 70½
- Coordinating Social Security income with other taxable distributions. See How to Reduce Taxes on Your Social Security Benefits
- Tax-loss harvesting in taxable accounts during market downturns, offsetting gains elsewhere in the portfolio
None of these strategies operates in isolation. The most effective retirement tax plans are built holistically, with each piece accounting for the others. Our Retirement Tax Planning service is designed around exactly this kind of coordinated approach.
Planning for What You Cannot Predict
Every retirement plan should be built to absorb uncertainty, not assume it away. The variables that are hardest to forecast, including how long you will live, what healthcare will cost, and what markets will do, are also the ones that matter most.
Longevity
Average life expectancy continues to rise. A 65-year-old couple today has a meaningful probability that one partner will live into their 90s. A retirement plan that runs out of money at 85 is not a successful plan. Building in longevity assumptions that are somewhat conservative, and maintaining some growth-oriented exposure throughout retirement rather than shifting entirely to income assets, addresses this risk over time.
Healthcare
Healthcare is typically the largest and least predictable expense in retirement. For those retiring before 65, bridging the gap to Medicare eligibility requires either COBRA continuation, marketplace coverage, or a spouse's employer plan, all of which carry real cost. Long-term care is a separate and often larger risk: the cost of extended care at home or in a facility can erode a retirement portfolio rapidly. Addressing this through insurance, self-insurance strategies, or hybrid life and long-term care products is worth explicit planning attention.
Market Volatility
A significant market decline in the first few years of retirement, combined with ongoing withdrawals, can permanently impair the longevity of a portfolio. This sequence-of-returns risk is one of the more serious structural risks in retirement income planning. Building a cash or short-term reserve, maintaining a flexible withdrawal strategy, and avoiding forced selling in down markets are the core mechanisms for managing it. For perspective on staying grounded when markets are turbulent, see When the World Feels Uncertain, Your Plan Is the Point.
Frequently Asked Questions
Q1: How much do I need to retire?
There is no single answer, and anyone who gives you one without knowing your situation is guessing. The relevant question is: how much income will you need in retirement, for how long, from what sources, and what portfolio balance supports that sustainably? A retirement income analysis built around your specific picture will give you a far more useful target than a general multiple of salary.
Q2: When should I start Social Security?
Later is generally better for those in good health who have other income to draw from in the interim, because the benefit increase from waiting (up to 8% per year past full retirement age) is significant and compounds over a long retirement. However, break-even analysis, spousal benefit coordination, and tax considerations can all shift the optimal answer for your situation. See The Social Security Bridge Strategy for a detailed breakdown.
Q3: Should I be doing Roth conversions before I retire?
For many pre-retirees, the years between leaving work and when Social Security and RMDs begin represent a window of lower taxable income, and a meaningful opportunity to convert traditional IRA or 401(k) balances to Roth at favorable rates. Whether this makes sense depends on your current bracket, your projected future income, IRMAA thresholds, and estate goals. See Is a Roth Conversion Right for You? for a detailed breakdown.
Q4: How do I protect my retirement savings from market volatility?
The most effective protections are structural rather than reactive: a cash reserve that covers near-term expenses without forcing portfolio withdrawals, an asset allocation appropriate for your time horizon and risk tolerance, and a withdrawal strategy that is flexible enough to reduce distributions in poor market years. Reacting to volatility by moving to cash typically causes more harm than the volatility itself. For more on building resilience into your plan, see When the World Feels Uncertain, Your Plan Is the Point.
Q5: At what age should I have my retirement plan in place?
The earlier the better, but there is no age at which it is too late to benefit from planning. For those in their 40s, the priority is typically savings acceleration, debt management, and benefit modeling. For those in their 50s, the focus shifts toward income sequencing, tax strategy, healthcare planning, and Social Security timing. For those already in or near retirement, the work centers on sustainable distribution, tax efficiency, and estate coordination. Our Retirement Income Planning service is available at every stage.
Conclusion
Retirement planning done well is not about hitting a single savings number or following a set of universal rules. It is about building a connected strategy that accounts for your income, your taxes, your healthcare, your legacy, and the life you actually want to live.
The decisions you make in the decade before retirement, about account contributions, Roth conversions, Social Security timing, and withdrawal sequencing, have more impact on your financial security than almost anything else. They deserve careful attention and consistent revisiting as your circumstances evolve.
At MJT & Associates, we specialize in helping individuals and families build retirement plans that hold together across market conditions, tax environments, and life changes. Whether you are a decade from retirement or already navigating distribution, our Retirement Income Planning and Retirement Tax Planning services are designed to help you make those decisions with clarity.
