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Top Ten Ways to Prepare for Retirement

A recent poll by Go Banking Rates revealed that 56% of Americans have less than $10,000 saved for retirement. And 28% of Americans aged 55 and older have ZERO saved for retirement. These are numbers that should scare us all. Even if you’re doing great on saving for retirement, those who aren’t saving will eventually be a tax burden on the savers if they continue to avoid a retirement savings plan.

With health problems on the rise and medical costs on the rise, people are in dire need of a plan to start saving at least something for retirement. And lest you be discouraged, know that “something” really does add up.

In my mom’s case for instance, she didn’t work until she was 35. She never made more than $17 an hour but was able to sock away about $35,000 in retirement savings on her smaller salary and shorter working time. She gained another $40k or so when she and her hubby sold her house (they keep their monies separate) and is living a comfortable life by budgeting and watching her spending.

Every dime you can save for retirement adds up and it’s never too late to start. Here are ten things you can do that will help you prepare for retirement and not be one of the millions of Americans with no retirement savings.

How to Prepare for Retirement

1. Estimate How Much Money You’ll Need

There are many online calculators that can help you estimate how much money you’ll need for retirement. When calculating the amount, be generous but not gluttonish when figuring out expenses. After you’ve calculated, don’t panic; I know the number may be higher than you expected. The point is that now you know how much you’d like to have and you can start building a plan from there.

Recommended Reading: How to Retire Happy, Wild, and Free: Retirement Wisdom That You Won’t Get from Your Financial Advisor

2. Make a Plan to Pay Off Debt

Less debt means less expenses, both now and in retirement. Make a plan to start budgeting your money and living below your means, putting all extra funds toward debt payoff. The sooner you get rid of your debt, the more financial peace you’ll have and the better prepared you’ll be for retirement.

Check out this series to help you create a solid plan for getting out of debt

how How and Why You Should Get Out of Debt: Intro

How and Why You Should Get Out of Debt: Part 1

How and Why You Should Get Out of Debt: Part 2

How and Why You Should Get Out of Debt: Part 3

Recommended Reading: Love Your Life, Not Theirs: 7 Money Habits for Living the Life You Want

3. Contribute Money to Your Workplace 401(k) Plan

If your employer offers a 401(k) program, start contributing, or increase your contributions if you need to. Be sure to pick your investment choices based on your risk tolerance and how close you are to retirement age. Younger peeps can afford to take more risk (as long as they’re comfy with that) whereas older folks need to choose lower risk investment options.

If you’re unsure which 401(k) investment options to choose, ask a financially savvy friend or family member, or use workplace resources for helping you choose if they’re available.

4. Open an IRA

It’s always a good idea to have your retirement eggs in a variety of baskets. Adults can contribute up to $5500 per year to either a Traditional IRA, a Roth IRA or a combo of the two. If you’re over age fifty, you can contribute up to $6500 per year. Check out local banks or online banks for current IRA rates.

6. If You’re Older, Start Considering Post-Retirement Living Arrangements

If you’re over forty, it might be a good idea to start working on a post-retirement living arrangement plan. Where do you want to live after you retire?

  • In your current home
  • In a 55+ apartment complex
  • With family members
  • In an out-of-state home

There are many options available. Ask yourself: Will you want to move to a warmer climate? Will you want to be close to kids and grandkids? Start thinking about these things now so you can better determine post-retirement housing costs. For instance, a post-retirement home in Arizona or Florida might seem nice, but a post-retirement home in Arkansas might be more cost-effective.

Start searching to get an idea of which areas and which housing options best fit into your current post-retirement plan.

7. Start Investing in Your Health

Now is the time to take control of your health so that health-related problems have less of a chance of ruining your retirement plans and running you financially dry. Consider these tips for improving your health and reducing the cost of healthcare for yourself, both now and later.

  • Start eating less processed foods and start eating more whole foods such as fresh vegetables and fruits, lean meats and healthy grains such as organic brown rice.
  • Increase your daily activity. Go for daily walks with a loved one. Practice a daily stretching routine. Lift free weights. Take an exercise class that fits in with your interests. Use an at-home DVD or cable TV workout program. Even if you’re new to exercise, short, light exercises will help and you’ll be able to build up to doing more within a short time.
  • Work to reverse health conditions that require medication by eating better and exercising. When the doc says it’s okay, reduce or eliminate the medication.Type 2 Diabetes and Heart Disease are examples of health conditions that can sometimes be reversed by switching to a whole foods diet and beginning a light exercise program.
  • Minimize alcohol consumption. Light alcohol consumption (for instance, 1 glass of wine a day) has been shown to have some health benefits, but less is definitely better when it comes to long-term health.
  • Get enough sleep. Sleep is very healing. Try to get at least 7 to 8 hours of quality sleep each night.
  • Reduce or eliminate stressors in your life. If something or someone is causing you major stress, work to change the situation. This might mean switching jobs, switching friends or getting professional counseling for unhealthy relationships.

8. Get Rid of Your Mortgage

Pay off your mortgage or consider selling or renting in order to reduce housing costs. If you’re mortgage free but own a home, you’ve got the added benefit of having the equity in your home available for retirement expense usage if necessary. If you’re selling your home to move to a rental, put all available equity in savings as a cushion.

9. Consider Investing in Real Estate

Real estate income can be a great source of post-retirement income. Consider educating yourself on real estate investing to see if it might be a good source of post-retirement income for you.

A Good Book for Beginners Interested in Real Estate Investing: The Book on Rental Property Investing: How to Create Wealth and Passive Income Through Intelligent Buy & Hold Real Estate Investing!

With real estate investing, you’ve got the monthly income from renters, as well as the equity that’s building up in your rental property with each passing month.

10. Review Your Insurance Needs

Insurance needs will likely change in retirement. Your employer may or may not offer a post-retirement insurance plan. If you served in the military, you may be eligible for health insurance through the VA. As you draw nearer to retirement, start making a plan for both health and life insurance needs by determining what plans are available for you and what they will cost you on an annual basis in retirement years.

Just by reading this post you’ve taken one step toward creating comfortable retirement years. Keep up the good work!

How do you feel about your retirement plan? Which areas would you like to be better prepared in?  


*See the full Go Banking Rates Retirement article by clicking here. 


  1. Great list! And of course it’s always best to start preparing early and young!

    I like the idea of investing in real estate in retirement. It’s a good investment option and can also provide you something to do and keep busy in retirement as well. Personally, that may be a route I want to take.

    Thanks for the post!

  2. Kathy says:

    All good tips. One thing I would add to number 1. is to have a good handle on your expenses prior to retiring. If you can’t live on your salary other then paycheck to paycheck, you won’t be able to live on reduced retirement income. Unless you have huge savings, if you still have a mortgage and kids in college, you probably can’t afford to retire just yet.

  3. Kathy says:

    Oh, one other thing. Consider purchasing long term care insurance fairly early. Yes, you will pay premiums for (hopefully) more years before you need it, but the premiums for a plan purchased at age 55 will be much lower than when purchased at age 65 or 70.

  4. Thanks for this, Laurie! We are over 40 and cannot decide on post-retirement living arrangements. I have a very scattered thought process on the topic. Sometimes I think we’ll just stay put. Other times, I think maybe we should sell and buy something cheaper. And then, I also wonder if I’d like to live in another area of the country. We are taking a wait and see approach right now to see where our kids end up too.

    One thing we plan to do very soon is invest in some real estate to try to speed along the path to retirement.

    • Laurie says:

      I think you’ll know what you want to do when the time comes, Amanda. We are throwing around several ideas but not making any decisions as of yet. We are thinking about real estate too. Seems like a great retirement investing choice to us.

  5. One of the biggest reasons I didn’t start saving for retirement when I was young (early 20’s) was because I found intimidating. I had no idea how to begin. My employer gave me 401k paperwork, but I didn’t even know what a 401k was! It took me almost 7 years until I finally started figuring it out – and only because I started working at a finance company in the department of 401k education. 🙂 It’s so important to start thinking about this early. Time is your biggest asset when it comes to growing money, but it also flies by when you’re busy living life and suddenly retirement isn’t eons away but fast approaching.

  6. The 401k (and the Traditional IRA) are such powerful tools for investing more, earlier, which is the name of the game. If you can defer taxes while you’re working (and presumably paying a higher tax rate than you will in retirement) those tax savings allow you to invest more than you normally would. Plus, sometimes you get a match above and beyond the tax savings. Win-win-win!

  7. Thanks for the encouragement that it’s never too late and even “something” can add up and make a huge difference. We are interested in add real estate investing (rental properties or flipping homes) to our plans in the future.

  8. 7-8 hours of quality sleep is SO important. I love working hard but I hate working hard to the point where I have to sacrifice my sleep. If there was a job such as a professional sleeper, I would take it in a heartbeat.

    After hearing stories about Marissa Mayer being able to function on 6 hours of sleep, I felt that I should do the same. Now I realized I shouldn’t because the amount of sleep we need is genetically determined. Our bodies are trainable to the point where we can need less sleep but I don’t want to train my body to do less of something I like!

    • Laurie says:

      Nearing fifty now I’ve really learned to value my sleep. If I need to take a nap during the day, I do it. If I fall asleep while reading (I only read educational/non-fiction) I let myself nap. I know my body is telling me “I’m tired!” 🙂

  9. Josh says:

    My wife & I have swapped retirement saving for the mortgage recently (changing careers didn’t help either), so we are contributing far less to retirement than before.

    I haven’t read any of Rachel Cruze’s work, but if its as good as her dad’s, I’m sure anybody will benefit from it.

    • Laurie says:

      You guys are young enough that that’s a good move, IMHO. The bit I’ve read from Rachel Cruze indicates that she’s on the right track. So good to see her dad’s hard work having a positive impact on his kids!

  10. Michael says:

    Hi Lauri,

    Knowing how much you will need at retirement is a good first step. Then the next step I would recommend is to put down when you desire to retire – target age.

    With this information, you can figure out how much you would need to save on an annual basis with an assumption on investment growth rate.

    Lastly, start saving per your plan and stick to it.


    • Laurie says:

      Yeah, us too, Brian. I keep thinking about all of those “start early” calculator comparisons where you spend so much less to gain so much more via compound interest when you start early.

  11. Mackenzie says:

    I think part of the problem in why people don’t have enough socked away for retirement is because our country is very “live in the moment” and “spend now, who cares about later?” kind of thinking and mentality. And sadly, many of our grandparents are no longer here that lived through the Great Depression to guide us on the path that we should be going on and why savings matters.

    Great list, my friend! 🙂

    • Laurie says:

      Yes, Mackenzie!!! The YOLO attitude is SO prominent. “I’ll worry about tomorrow tomorrow.” Nearing 50 now, I’m learning quickly that “tomorrow” comes much faster than we think! 🙂

  12. Great list. It’s scary when you read those retirement stats. People keep saying that can’t afford to save for retirement…I don’t know how you can afford NOT to. The 401k is an excellent place to save money and the reduction in your paycheck is not as much as you think since it is pre-tax. I was able to convince a co-worker who was a bad saver to open one and he was pleasantly surprised that he didn’t notice that big of a difference.

    • Laurie says:

      I am so glad you were able to convince your co-worker to start saving in his 401k. It really is important! You’re making a difference, Andrew! I’ll bet that guy will thank you in about 30 years.

  13. Jim says:

    Great article. Hindsight being 20-20 – wow – did we get blind-sighted so I’m sharing this with you and your readers so you don’t. We’re in our late 50’s, no debt, paid off the mortgage etc, but still have a kid at home and a grandkid with special needs. Nonetheless, we thought we were doing great until my wife (the major bread winner of our household) had a stroke – out of nowhere and now we’re scrambling. I wouldn’t say we’re screwed per se, but we sure as hell are no longer on the track we thought was a given.


    • Laurie says:

      Oh no!! So sorry to hear about your wife, Jim; I hope she’s doing okay now. Thanks so much for sharing a powerful story. Readers: listen and learn!!! Keeping you all in our prayers, Jim. Stand strong!

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