Preparing for Retirement: Building a Strong Financial Foundation

Many people expect to save for retirement, yet research shows that even those nearing retirement often fall short of their savings goals. Retirement planning can feel overwhelming, especially when you’re unsure which accounts to use or how much to save. Understanding your options and starting with a clear plan can make the process more manageable—and far more effective.

Why Retirement Planning Can’t Wait

It’s easy to delay retirement savings when other financial priorities demand attention, particularly when retirement feels far away. However, a secure retirement depends on consistent saving over time. Starting earlier gives your money more opportunity to grow and reduces the pressure to save large amounts later in life.

Understanding Your Retirement Savings Options

Retirement accounts fall into several broad categories, each designed for different employment situations and financial needs.

Workplace Retirement Plans

Many employers offer retirement plans that allow you to contribute automatically from your paycheck. In some cases, employers also add money to your account.

Common examples include:

  • 401(k) plans, which allow you to contribute pre-tax income and may include employer matching contributions.
  • SIMPLE IRAs, another pre-tax option typically offered by smaller employers, with lower contribution limits.
  • Pensions, where employers fund the plan and provide a predictable monthly income in retirement based on factors such as salary and years of service.

Plans for Government, Nonprofit, and Military Employees

Certain retirement accounts are designed specifically for employees of tax-exempt organizations, government entities, or the military.

These include:

  • 403(b) plans, which function similarly to 401(k)s and are commonly offered by schools, hospitals, and nonprofit organizations.
  • The Thrift Savings Plan (TSP), available to federal employees and members of the U.S. military.

Options for Self-Employed Individuals

Business owners and freelancers have access to retirement plans that allow them to set aside pre-tax income independently.

Examples include:

  • SEP-IRAs, which allow business owners to contribute for themselves and eligible employees.
  • Solo 401(k)s, designed for individuals who own a business with no employees other than a spouse.

Individual Retirement Accounts

Some retirement plans are not tied to employment and can be opened independently.

Two common types are:

  • Traditional IRAs, which may offer tax-deductible contributions and tax-deferred growth.
  • Roth IRAs, funded with after-tax dollars, allowing for tax-free qualified withdrawals in retirement.

Getting More Out of Your Contributions

Saving consistently is important, but how you save matters too. Reviewing your account choices and contribution strategy can help you take advantage of available tax benefits.

Helpful strategies include:

  • Taking full advantage of any employer matching program
  • Using more than one type of retirement account
  • Contributing the maximum amount allowed when possible

How Taxes Affect Retirement Savings

Retirement accounts are generally funded using either pre-tax or after-tax dollars.

With pre-tax contributions, money is added before income taxes are applied, lowering your taxable income today. Taxes are paid later when funds are withdrawn in retirement.

With after-tax (Roth) contributions, taxes are paid upfront. The benefit comes later, as qualified withdrawals in retirement are tax-free.

Using a combination of both types can provide flexibility and potential tax advantages now and in the future.

Investing Based on Your Timeline

As retirement approaches, the amount of risk you can comfortably take often changes. Those with more time before retirement may tolerate higher risk, while those closer to retirement may prioritize stability.

In general:

  • Conservative approaches focus more on bonds and cash to preserve savings
  • Moderate approaches balance growth and stability
  • Aggressive approaches emphasize stocks to pursue higher long-term growth

Your ideal mix depends on how close you are to retirement and your personal comfort with risk.

Habits That Support Long-Term Success

Effective retirement planning is built on a few key principles:

  • Starting as early as possible, even if contributions are small
  • Investing savings rather than leaving them solely in cash
  • Setting clear goals to guide decisions and build confidence

People who plan ahead often report feeling more financially secure and less stressed about the future.

Where to Go from Here

If you’re ready to take the next step:

  • Review the retirement plans offered by your employer and ask about matching contributions
  • Explore retirement planning tools or services offered by your financial institution
  • Consider opening an individual retirement account to supplement workplace savings

Retirement planning doesn’t require perfection—it requires consistency, informed choices, and a willingness to start. With the right approach, you can build a future that feels both secure and achievable.