Retirement Planning in 7 Steps

Retirement planning is the work of answering one question: how will you pay for the years when you no longer earn a paycheck? The answer has a few moving parts. You need a rough idea of what you will spend, a list of the income sources that will cover it, accounts that hold your savings, a plan for taxes and health costs, and a habit of checking it all once a year.

This guide walks through seven steps in plain English. It explains rules and trade-offs. It is general education, not personal advice. Where a choice depends on your situation, a qualified professional, such as a tax preparer or a fee-only financial planner, can look at your full picture.

Why plan at all? What the Federal Reserve survey found

Many Americans are unsure they are ready. The Federal Reserve's Report on the Economic Well-Being of U.S. Households in 2025 (May 2026) found that 35 percent of non-retired adults said their retirement savings plan was on track. The same report shows that 61 percent of non-retired adults had a tax-preferred retirement account such as a 401(k) or IRA, and 21 percent had a defined benefit pension.

Those are survey answers about how people feel, not a measure of whether anyone will have enough. They do show that planning is not something most people can skip and hope for the best.

Step 1: Set your goals and a rough timeline

Start with questions only you can answer. When would you like to stop full-time work? Will you work part-time? Where will you live? Will you support a spouse, a parent or an adult child?

Your timeline matters because several rules switch on at specific ages. The table below lists the ones this guide covers.

Step 2: Estimate what you will spend

Your future spending is the target every other step aims at. A simple way to build it is to list what you spend today in three groups: needs (housing, food, utilities, insurance, health care), wants (travel, hobbies, gifts) and one-time items (a roof, a car). Then adjust for what will change. A paid-off mortgage may lower costs. Health care and travel may raise them.

Use your own bank and card statements, not an average. Averages hide large differences between households. Write each number down, even if it is a rough guess, and revisit it as your plans become clearer. A useful exercise is to see whether your "needs" can be covered by income that does not depend on the stock market, such as Social Security or a pension. Some planners call this an income "floor."

Step 3: List your income sources

Retirement income can come from several layers: Social Security, any pension, and your own savings. Social Security has timing choices worth understanding early.

How claiming age changes Social Security

You can start retirement benefits as early as age 62, but the monthly amount is smaller than if you wait. The Social Security Administration's Early or delayed retirement table shows that for people born in 1960 or later, full retirement age is 67. Claiming at 62 pays 70 percent of the full benefit. Each year of delay past full retirement age adds 8 percent, up to age 70, where the benefit is 124 percent of the full amount.

These are percentages of the same base amount. They do not tell you which age is right for you. That depends on health, other income, a spouse's benefits and more. The SSA's own pages cover the full rules.

Pensions and savings

If you have a pension, ask the plan administrator for a written estimate of your benefit at different ages and the payout options, such as single-life or joint-and-survivor. Your savings fill the gap between your spending and your guaranteed income. As a simple illustration with made-up numbers: if you expect to spend $4,000 a month and Social Security and a pension together pay $3,000, your savings would need to supply the remaining $1,000 a month, plus extra for taxes and surprises.

Step 4: Choose where your savings live

Different accounts are taxed in different ways, and each has yearly limits. For 2026, the IRS announced these limits in IR-2025-111:

The IRS Traditional and Roth IRAs page explains the basic split for IRAs. Traditional IRA contributions may be deductible if you qualify, and deductible contributions and earnings you withdraw are taxable. Roth IRA contributions are not deductible, and qualified withdrawals are not taxable. Employer plans such as a 401(k) have their own plan rules, and your employer may offer a match, which is worth asking about. The difference between account types is covered in our guides to traditional vs. Roth accounts and IRA vs. 401(k) plans.

If you started late

If your savings are behind, the catch-up limits above give people 50 and older more room. Delaying retirement also gives savings more time and shortens the years they must cover. Neither is a promise of results, but they are the levers the rules provide.

Step 5: Plan how you will withdraw money and pay taxes

Taking money out is a different skill from saving it. Two rules are worth knowing now.

First, withdrawals from traditional accounts are taxable (the IRS page on traditional and Roth IRAs says so for IRAs), while qualified Roth withdrawals are not, so the order in which you tap accounts can affect your tax bill. Second, required minimum distributions (RMDs) force withdrawals from certain retirement accounts. The IRS page on required minimum distributions says you generally must start at age 73, and the first RMD from an IRA is due by April 1 of the year after you reach 73. Missing an RMD can trigger a 25 percent excise tax on the amount not withdrawn, reduced to 10 percent if you correct it within two years.

Because tax outcomes depend on your income, state and filing status, this is a good place to talk with a tax professional.

Step 6: Plan for health costs and other risks

Health coverage is a big piece of the plan. According to Medicare.gov, you are first eligible to sign up for Parts A and B starting 3 months before you turn 65 and ending 3 months after the month you turn 65. The site warns that you might pay a monthly penalty for as long as you have Part B, and that the penalty goes up the longer you wait. If you are still working at 65 and have employer coverage, rules differ, so check before delaying.

Other risks to name in your plan include:

• Market declines near the start of retirement.
• Inflation, which raises what the same lifestyle costs over time.
• Long-term care costs, which are worth pricing out before you need them.
• Living longer than expected.
• Rule changes, since limits and ages in this guide are the 2026 figures and can change.

You cannot remove these risks. You can decide which ones you are most exposed to and how to prepare.

Step 7: Review it every year

Plans go stale. Plans go stale, so keep a one-page summary with your spending estimate, your income sources and their start dates, your account list with balances, the names of your beneficiaries, and the contacts for your tax preparer and plan administrators. A spouse or trusted family member should know where it is.

Once a year, check your spending against your estimate, update account balances, confirm your beneficiary designations, and look at the new yearly limits. Review it sooner after big events such as a job change, a death, a divorce or a move.

Where gold and silver IRAs fit - and where they do not

A gold or silver IRA is a type of self-directed IRA that holds IRS-eligible physical metal. It is one possible place for a part of an IRA, not a required step in a retirement plan. Our guide What is a Gold IRA? explains how the pieces fit together.

Why some people consider them. People who hold gold and silver often describe three reasons: the metals are tangible, they move differently from stocks and bonds so may add diversification, and some people see them as a way to hold value outside the financial system. These are arguments that supporters make. They are not guarantees, and past behavior does not tell us what a metal will do next.

What the rules say. The IRS collectibles page says an IRA's acquisition of a collectible is treated as an immediate distribution equal to its cost. There are exceptions for certain gold, silver and platinum coins and for bullion "of a certain fineness," and for bullion a bank or approved non-bank trustee must keep physical possession. Our reading of this is that the metal must qualify and be held by a bank or approved trustee on the IRA's behalf, which is why personal possession can cause problems; the Tax Court case McNulty v. Commissioner is discussed in our rules guide. This is an interpretation, not legal advice. See Gold IRA rules for the details.

What it costs and what can go wrong. Costs and risks are real: our guides cover dealer markups, custodian fees and storage fees, price swings, and the cost of selling, and none of the arguments above is a guarantee. See Gold IRA fees, Gold IRA risks and how Gold IRAs are taxed.

Where they may not fit. Metals do not replace the basics in steps 1 to 7: a spending estimate, guaranteed income, health coverage and a tax plan. If you are comparing a rollover, our Gold IRA rollover guide and withdrawal rules cover the process, timing and tax rules. Whether any share of your savings belongs in metal depends on your situation, so consider talking with a qualified tax or financial professional before you move retirement money.

Related questions

These short answers point back to the steps above.

What is the first thing I should do?

Estimate your yearly spending. Every later step, from how much to save to when to claim Social Security, depends on that number.

How much can I put into a 401(k) or IRA in 2026?

The IRS limits for 2026 are in the table in Step 4. Your own limit can be lower, depending on your pay and, for IRAs, other factors. Check the IRS pages or ask a tax professional.

Do I have to take money out of my accounts?

Generally yes, starting at age 73, as described in Step 5. Our guide on RMDs and the IRS page explain the details, including which accounts are covered.

Is there one right plan?

No. Two households with the same savings can need very different plans because of health, family, taxes and where they live. The seven steps are a framework for asking better questions, not a formula that produces one answer.

When should I talk to a professional?

When a decision depends on your tax situation, your health, your spouse's benefits or a large account move such as a rollover.