A Guide to Retirement Planning for Seniors

Discover our top tips for building a successful retirement plan, including everything from creating a budget and maximizing your savings to addressing important retirement questions.

Maureen Stanley Maureen Stanley Writer & Editor
Jeff Hoyt Jeff Hoyt Editor in Chief

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Planning for retirement can be exhilarating and a bit terrifying. As you prepare to live on a fixed income, putting a detailed retirement plan in place is essential. In this article, we’ll explain essential factors to consider as you approach retirement. You’ll learn how to establish financial stability in the years ahead by creating a budget, evaluating your assets, and maximizing your savings.

Discuss Your Vision for Retirement With Your Spouse

Communication between partners and spouses is key. Keri Dogan, senior vice president of retirement income solutions at Fidelity Investments, cautions, “Spouses often don’t have the same vision for retirement.”

Avoid this communication breakdown by talking openly and honestly about your retirement plans. You may dream of traveling across the country in an RV, while your significant other is envisioning staying home and spending more time with family and friends. Work together to map out your life of leisure (and how you’ll pay for it).

Frugal Living tips for Seniors

10 Retirement Planning Questions

As you discuss your ideal retirement lifestyle with your partner, include the 10 questions below.

  1. When do you want to retire?
  2. Where do you want to retire?
  3. How much retirement income do you anticipate earning? For example, earnings can come from Social Security, a 401(k), or pensions.
  4. What does your retirement lifestyle look like?
  5. How much do you need in savings to realistically fund that lifestyle?
  6. Are you able to make catch-up contributions if you’re below your needs?
  7. Do you plan to claim Social Security before you reach your full retirement age?
  8. Do you plan on working part-time during retirement to supplement your savings?
  9. What are your current and future health care needs?
  10. Do you have life and long-term care insurance?

Estimate Your Expenses

If you’re losing sleep over running out of money or needing to cut spending significantly during your retirement, you’re not alone. The State of Retirement Planning Study by Fidelity Investments reported this as one of the top worries for all generations of adults.

Inside Scoop:

Inside Scoop: Financial security and preparedness come in many forms. Our in-depth guide to finance for seniors can help you learn more!

Dogan at Fidelity shares, “Many people don’t have a good sense of exactly what they’re spending day in and day out.” Because of this, it can be challenging to estimate expenses in retirement. “Our rule of thumb is that we usually expect people to spend somewhere between 55 and 80 percent of their preretirement income,” says Dogan.

Think About Health Care Costs

Our health care needs evolve as we grow older. Unexpected expenses such as copays, deductibles, and insurance costs can eat away at our hard-earned savings. According to Fidelity’s State of Retirement Planning Study, the average cost of out-of-pocket health care expenses for a couple retiring at age 65 is $295,000. For example, the national average cost for assisted living facilities is about $66,126 per year.

Pro Tip:

Pro Tip: Keep health care costs in check by maintaining good health, staying on top of medical and dental preventative care, and getting enough physical activity.

As you work through your retirement plan, consider the impact of your future health care needs on your overall retirement savings. Having an idea of the type of health care coverage you’ll have, and the associated costs, will give you a better estimate.

Take a Hard Look at Retirement Housing Costs

Housing will most likely play a starring role in your retirement budget. Whether you’re considering staying in your current home, downsizing, or moving to a retirement community, retirement housing costs can take up a large percentage of your savings.

Did You Know?

Did You Know? Our comprehensive guide on planning for housing in retirement walks you through the different types of senior living options that are available, their costs, and how to choose the right place for you.

Financial Assistance for Senior Care

Five Retirement Housing Options to Explore

  1. Aging in place
  2. Independent living retirement communities
  3. Assisted living retirement communities
  4. Continuing care retirement communities
  5. Nursing homes

There are plenty of great housing options to check out in retirement. For a closer look at your options, view the video below on the different types of senior housing.

Jeff Hoyt’s reviews the different types of senior housing

Create a Retirement Budget

Putting your retirement dreams into reality can be overwhelming. No two retirement budgets are alike, so your first step to enjoying your retirement years is to create your own plan. This ensures your budget is customized to your goals, needs, and wants.

Essential items are considered “needs,” such as food, shelter, and clothing. Health care and life insurance also fall under the essential items category.

Discretionary items are your retirement “wants.” These certainly vary from person to person. You may want to live in a beachfront community or travel the world, but do you have a savings plan in place to do so? It’s important to sort out your needs versus wants and determine how you’ll cover these costs.

From the Pros:

From the Pros: Worrying about how much is “enough” to save for retirement? Explore these popular methods to calculate how much money you need to retire comfortably.

According to Dogan at Fidelity, “Doing a planning exercise and having a target in terms of what’s spent each year is critically important.” Don’t expect your money to last forever. “The biggest risk is for people who don’t plan and just start spending,” says Dogan. “It’s hard to recover from overspending further in your retirement years,” she advises.

Retirement Planning Budget: Essential Items

Use the table below to build your budget for essential items.

Housing costs Medical costs Personal expenses Daily living expenses
Rent or mortgage and property taxes Medical insurance, including Original Medicare, Medicare Part D, Medigap, and supplemental insurance Auto payment and auto insurance Utilities, including electric, gas, and water
Home or renter’s insurance Dental and vision insurance Outstanding debt Groceries
Home maintenance Life and long-term care insurance Federal, state, and local taxes Cable, phone, and internet service
Home modification costs to age in place, such as a stair lift, an adjustable bed, or durable medical equipment Out-of-pocket expenses Clothing Transportation costs

Retirement Planning Budget: Discretionary Items

After you’ve covered the essentials, consider which discretionary items you have room for in your budget.

  • Optional home improvements or upgrades
  • Luxury goods, services, and housing
  • Dining out
  • Travel and entertainment
  • Hobbies
  • Gifts
  • Charitable donations
  • Tobacco and alcohol
  • Nonessential personal care services
  • Unwarranted new vehicle or home furnishing upgrades

Understand Where Your Retirement Investments Come From

Retirees often draw income from several areas. A portion of your earnings will most likely come from retirement accounts. It’s vital to keep track of where your money is invested and understand how and when you can draw upon it. Keep all of your retirement account information organized in a file folder. Make sure you have a recent statement that includes the account number, portfolio asset details, designated beneficiaries, and the phone number for customer service.

Pro Tip:

Pro Tip: As you review your retirement accounts, now is the perfect time to ensure your beneficiaries are up-to-date and your estate plan is arranged.

Common retirement accounts include the following:

  • A 401(k)
  • A 403(b)
  • A 457(b)
  • A Thrift Savings Plan (TSP)
  • A traditional and Roth IRA
  • Pensions

>>Learn More: 401(k) Calculator

Pro Tip:

Pro Tip: Maximize your money for retirement by investing smart. Robo-advisor services manage your money or help you plan for retirement using online platforms and algorithms. Discover the best robo-advisors for seniors and rest easy knowing your money is in good hands.

Assess Your Retirement Risks

You’ve been saving for retirement for years. The way we invest our money isn’t a “set it and forget it” action. Take time to thoroughly review your retirement accounts to evaluate if investments are overly conservative or aggressive.

As many look forward to a retirement lasting 30 years or more, proper investment is key. Dogan at Fidelity notes that it’s important to make sure asset allocations meet your lifestyle, goals, and expected lifespan.

Play Catch-Up to Maximize Your Retirement Savings

Many people underestimate how much to save for retirement. Only one-quarter of the people surveyed for Fidelity’s State of Retirement Planning Study knew they needed 10 to 12 times their last full year of working income by the time they retired.

If you’re behind on your retirement goals, there’s excellent news for those ages 50 years and over. In addition to your standard retirement contributions, the IRS allows annual catch-up contributions to certain retirement plans.

Dogan at Fidelity encourages people to take advantage of employer-matching retirement plans, which are essentially free money. Another investment priority should be maxing out any tax-advantaged account, such as a 401(k), IRA, or HSA.

>>Read About: IRA Calculator

Retirement plan type 2023 catch-up contribution
401(k), 403(b), SARSEP, and 457(b) Up to $7,000
SIMPLE IRA or SIMPLE 401(k) Up to $3,500
IRA Up to $1,000

Setting Up a Social Security Account

Reduce or Eliminate Debt

Part of your retirement plan should include setting a goal to pay down or eliminate debt. Paying off your mortgage, credit cards, or car loan frees up precious retirement funding. If possible, make extra payments now to pay down your debts faster. Tackle any high-interest debt first to make the most of your payoff plan.

Pro Tip:

Pro Tip: Did you know stretching your savings can be fun? Older adults have access to hundreds of budget-friendly senior discounts. Check out our guide on how to snag the best discounts.

Are you struggling to reduce your debt? Watch the video below to learn why you may not need to worry about old debts.

You may not need to worry about old debts. Watch this video to find out why.

Don’t Make These Five Retirement Mistakes

Knowledge is power throughout your retirement journey! Even the best-laid plans can be undermined if you:

  1. Neglect to diversify your portfolio.
  2. Underestimate the amount of life insurance you’ll need.
  3. Don’t know how much Social Security you’ll receive.
  4. Fail to take advantage of catch-up contributions.
  5. Miss the opportunity to create a comprehensive retirement plan.
Quick Tip:

Quick Tip: Make your move in retirement readiness by following our step-by-step guide on setting up a my Social Security account and estimating your benefits with our Social Security calculator.

Plan for Potential Retirement Complications

Just about everyone dreams of retiring early. However, handing in your notice at work before you’ve reached full retirement age (FRA) can negatively affect your budget and plan in a few ways:

  • Decreased Social Security benefits. You won’t receive 100 percent of your Social Security until you reach your FRA. Find your FRA by birth year in the Social Security Administration’s full retirement age chart.
  • Gap in medical coverage. Medicare doesn’t kick in until age 65. If you plan to retire before then, you’ll need to enroll in COBRA or an independent health care plan.
  • Less long-term retirement funds. The earlier you retire, the sooner you’ll tap into your retirement savings. Be sure you have enough savings to live comfortably throughout your post-retirement life.

Social Security, and when to claim it, is commonly misunderstood, says Dogan at Fidelity. “A lot of people tend to claim too early, and they don’t necessarily understand the trade-off they’re making in terms of overall lifetime income.”

To learn more about how to maximize your Social Security benefit, watch the video below with our Editor-in-Chief, Jeff Hoyt.

Jeff Hoyt explains how you can maximize your Social Security benefit

Evaluate Taxes and Retirement Cost of Living

  • Cost of living. It’s essential to not only to account for the cost of living during your retirement years, but also look at inflation. Many older adults living in states with high senior living costs choose to relocate to tax-friendly and low-cost-of-living states.
  • Property tax exemptions. Many states and cities give seniors special exemptions on their home value. These exemptions vary by location, but the property must be your place of residence. Many places also stipulate how long you need to have lived there.
  • Health care tax deductions. Costly out-of-pocket expenses can throw off even the best retirement budget. The good news is you can claim some of these expenses on your taxes.
Pro Tip:

Pro Tip: A trusted financial advisor can help you understand and navigate any tax exemptions and implications.

Prepare for the Unexpected

Your retirement scenario can change despite having a targeted retirement age and solid strategy to achieve your goals. It’s important to consider alternative options and understand where your planning and savings fall.

>>Read More: Retirement Savings Calculator

According to the U.S. Federal Reserve’s Report on the Economic Well-Being of U.S. Households, 29 percent of retirees indicated that a health problem factored into their decision to retire, and 15 percent said they retired to care for family members. 11 percent said they were forced to retire or that work was not available.1

Give Your Retirement Budget a Test Drive

You’re almost there! Before you leap into official retirement, give your budget a test drive. This is a fantastic way to ensure your retirement budget and lifestyle don’t exceed the funding you can draw upon.


Remember: While planning for retirement can feel stressful, it’s also an exciting milestone to celebrate! Check out our list of the best retirement gifts and our favorite retirement quotes.

If there are tweaks to be made, you still have time to adjust accordingly. If the savings you’ll be living on aren’t adding up, there are several ways to modify your plan, including:

  • Revisit your budget’s needs versus wants.
  • Increase your current retirement contributions.
  • Delay your retirement date.
  • Plan to work part-time.

Retiring on a Limited Income: Know Your Options

Daily living expenses can be costly. Not everyone can build up massive savings for health care, housing, and other essential post-retirement expenses. Older adults with limited income have options to ensure they can live out their golden years securely, including:

  • Medicaid. The Medicaid program provides health coverage to seniors with low incomes and limited financial resources.
  • Medicare Savings Programs. Individuals who don’t qualify for Medicaid may be able to enroll in one of the Medicare Savings Programs. These programs help those with limited income and assets pay for some (or all) of Medicare Part A and Medicare Part B.
  • Supplemental Security Income (SSI). SSI is designed to help aged, blind, and individuals with disabilities with little to no income meet their basic needs for food, clothing, and shelter.
  • Affordable senior housing. There are multiple options for affordable housing, including low-income senior apartments, cooperative housing, and the federal housing program for seniors through the U.S. Department of Housing and Urban Development.
  • Program of All-Inclusive Care for the Elderly (PACE). The PACE program provides the entire continuum of care and services to eligible adults aged 55 and over with chronic care needs.
  • Military veteran benefits. Members of the U.S. military who meet age or disability criteria may be eligible for a Veterans Affairs pension, Aid and Attendance, and housing benefits.
  • Supplemental Nutrition Assistance Program (SNAP). Eligible low-income individuals and families receive SNAP benefits that are used like cash to purchase food.
  • Low Income Home Energy Assistance Program (LIHEAP). Eligible low-income households receive assistance through LIHEAP with energy costs, bill payments, and energy crisis assistance.

» Further Reading: Pension Calculator

If you’re a veteran, watch our video below on how to take advantage of Veterans Pension and Aid and Attendance benefits!

Veterans can take advantage of Veterans Pension and Aid and Attendance benefits with these tips from Jeff.
Did You Know?

Did You Know?Paying for senior living with no money is achievable when you know how to draw from the pool of resources in your state.

Senior Debt Resources

As we mentioned earlier, reducing or eliminating debt is an essential part of retirement planning. If you’re dealing with debt, watch our videos below with Attorney Eric Olsen to learn more.

Reducing Student Debt

Are you still paying off old student debt? Check out the video below to learn how you can avoid having your Social Security checks taken away to cover student loans.

Jeff Hoyt explains how you can avoid losing your Social Security check when paying student loan debt.

Four Things Seniors Struggling With Debt Should Know

Did you know you may be protected from lawsuits, garnishments, and debt collectors? View the video below for the top four things all seniors struggling with debt should know.

Jeff Hoyt lists the four things seniors struggling with debt should know.

Medical Debt

If you’re dealing with hefty medical bills, watch the video below to learn why you might not need to worry about paying them off.

Jeff Hoyt explains why seniors shouldn’t worry about medical debts.
Written By:
Maureen Stanley
Writer & Editor
Maureen joined SeniorLiving.org with more than 10 years of experience writing in health, lifestyle, and nutrition for premium brands like General Mills, Westinghouse, and Bristol Myers Squibb. Her passion for empowering older adults is evident in coverage of topics like… Learn More About Maureen Stanley
Reviewed By:
Jeff Hoyt
Editor in Chief
As Editor-in-Chief of the personal finance site MoneyTips.com, Jeff produced hundreds of articles on the subject of retirement, including preventing identity theft, minimizing taxes, investing successfully, preparing for retirement medical costs, protecting your credit score, and making your money last… Learn More About Jeff Hoyt