Retirement can inspire both excitement and concern. Some envision carefree years of travel and leisure, while others worry about whether their savings will stretch far enough. That’s why starting retirement financial planning early can be so important. It’s not just about putting money aside — it’s about creating a long-term system that can sustain your lifestyle once regular paychecks stop. 

This guide explores how to plan for retirement, from setting financial goals to understanding income strategies, and how products like annuities from Gainbridge can help.

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What is retirement financial planning?

Retirement financial planning is the process of preparing savings and investments to support you in your later years. It’s not a one-time task — the best retirement planning typically starts early in your career and evolves over time to reflect changes in your age, financial goals, and market conditions. 

Retirement planning can require a long-term perspective, and most retirement planning advice advocates for starting young. Early planning can enable you to take advantage of compounding interest, one of the key drivers for growing wealth. Even if you begin later, though, a strategic and well-crafted approach can help you build savings and create a reliable income stream. 

How to create a retirement financial plan in 5 steps

Here's a step-by-step retirement guide to create a financial plan that works for you. Everyone has a different situation and needs so what works for one person may not work for you. It is important to review your goals and objects before making any decisions. 

1. Estimate your retirement needs

Start by mapping out your long-term financial needs, including essential expenses and lifestyle choices. Experts often recommend planning to replace 70–80% of your pre-retirement income with other sources, such as savings and investments. This can help ensure you have income to cover essentials like housing, utilities, and groceries, along with discretionary spending such as travel and hobbies.

A detailed budget can help make this projection more realistic. Remember to factor in inflation, increasing healthcare costs, and potential changes like downsizing or relocating. 

2. Choose income sources

Once you have an idea of your expected expenses, determine how you might fund them. Typical income sources include Social Security, pensions, and retirement accounts like 401(k)s or IRAs. Because Social Security generally replaces only about 40% of pre-retirement income, many may look to maximize their retirement accounts through employer matching and increased contributions. 

You might also consider products like fixed annuities, which can provide predictable interest and guaranteed income while reducing exposure to market volatility. This can make them a reliable option for retirees seeking financial security and predictability. 

3. Pay off debt and adjust savings

Carrying debt into retirement can quickly erode your savings, so it can be recommended to prioritize paying off high-interest debt like credit cards or personal loans before you stop working. At the same time, you may focus on boosting your savings. Depending on your age, you may qualify for “catch-up” contributions to retirement accounts, consider extending your working years, or adjust your lifestyle goals to align with your financial outlook. 

4. Select the right investments

Your investment strategy should evolve as retirement approaches. Younger savers can generally take on more risk in exchange for higher growth potential. As retirement draws closer, your mindset typically may shift towards preservation, with lower-risk options like bonds or fixed annuities to help protect the wealth you’ve accumulated. 

Diversifying your retirement portfolio can be key — a balanced mix of stocks, bonds, and cash equivalents can help to reduce the risk of a market downturn affecting your entire portfolio.

5. Create a withdrawal strategy

Finally, design a plan for withdrawing savings from your retirement accounts. The sequence and rate of withdrawals can affect both your taxes and how long your money lasts. A thoughtful strategy can coordinate which accounts to draw from first, helping to balance taxable and tax-advantaged income. The goal here is typically to manage your cash flow, minimize your tax burden, and protect against your investments being depleted too quickly. 

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Mistakes to avoid in retirement financial planning

Even with careful preparation, small missteps can undermine a retirement strategy. Here are four of the most common pitfalls to avoid.

Underestimating longevity

Advances in technology and healthcare mean people are living longer, often well into their 80s and 90s, which can impact the amount of savings needed in retirement. Underestimating life expectancy can lead to outliving your savings and facing unwanted financial sacrifices later in life. A more prudent approach to financial planning for retirees is to account for a longer period than you think you’ll need, building in extra security for the years ahead. 

Relying solely on Social Security

Social Security is rarely enough to cover both essential expenses and personal preferences, so relying on it as your only income source can leave a significant gap. A strong strategy typically incorporates multiple sources of income, including investments like annuities. 

Ignoring taxes or inflation

Inflation can slowly decrease purchasing power, while taxes can take a bigger bite out of retirement income than many people expect. Failing to plan for both of these can derail even well-structured strategies. To help mitigate their impact, consider tax-advantaged accounts such as Roth IRAs and deferred annuities to help reduce your tax burden and maximize savings growth potential.

Not accounting for healthcare

Healthcare is often a major expense in retirement. Even with private insurance or Medicare, out-of-pocket expenses like premiums, prescription drugs, and long-term care can add up quickly. Including healthcare needs in your financial plan helps protect your savings from being drained by unexpected medical costs. 

How Gainbridge annuities can support retirement planning

Annuities can be a reliable way to create predictable funds for retirement. By converting a portion of your savings into dependable income, annuities can provide long-term stability and peace of mind. Gainbridge offers a range of annuity options designed to fit most portfolios and a dedicated team to guide you through the process. With no hidden fees or commissions, our innovative, digital-first platform can help you plan for retirement with confidence. 

Explore Gainbridge today to learn how an annuity can support your lifestyle goals. 

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This article is intended for informational purposes only. It is not intended to provide, and should not be interpreted as, individualized investment, legal, or tax advice. For advice concerning your own situation please contact the appropriate professional. The GainbridgeⓇ digital platform provides informational and educational resources intended only for self-directed purposes. Investing involves risk, including loss of principal and past performance does not guarantee future results.