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    Retirement Planning Basics: What to Think About Before You Stop Working

    A plain-English overview of retirement planning — savings, Social Security timing, Medicare enrollment, and the steps to take in the years before you retire.

    4 min read 5 stepsApril 20, 2026Verified April 2026
    1

    Calculate your expected expenses in retirement

    ~19s
    Write down your current monthly expenses. Then mark which ones will go away in retirement (mortgage if paid off, commuting, work lunches) and which new ones might appear (more travel, higher healthcare costs). This gives you a realistic monthly income target.

    Quick Tip

    Use AARP's free Retirement Calculator at aarp.org to estimate how long your savings will last.

    2

    Check your Social Security estimate

    ~15s
    Go to ssa.gov and create a "my Social Security" account. Once logged in you can see your full earnings record and estimated monthly benefit at ages 62, 67, and 70. This is real data specific to you — not a guess.
    3

    Review your savings accounts

    ~25s
    Log into any 401(k) or IRA accounts you have. Check the current balance, how the money is invested, and whether your employer offers a matching contribution you are not taking full advantage of. If you are 50 or older, IRS rules allow you to make extra "catch-up" contributions each year.

    Quick Tip

    If you are unsure how to log into an old 401(k), contact your former employer's HR department — they can tell you who manages the plan.

    4

    Learn your Medicare enrollment window

    ~26s
    Most people become eligible for Medicare at 65. Your Initial Enrollment Period is a 7-month window around your 65th birthday. Missing it can result in permanent late enrollment penalties on your monthly premium. If you are still working and covered by an employer plan at 65, different rules apply — call 1-800-MEDICARE for guidance.

    Warning

    Do not assume Medicare is automatic. You must actively enroll. Missing the deadline costs you more money every month for the rest of your life.

    5

    Consider talking with a fee-only financial advisor

    ~17s
    A fee-only advisor charges you directly for their time — they do not earn commissions for selling you products. This means their advice is less likely to be biased. The National Association of Personal Financial Advisors (napfa.org) has a free directory to find one near you.

    You Did It!

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    Retirement planning sounds intimidating, but at its core it is answering a few practical questions: How much money will I need? Where will that money come from? When should I start collecting benefits? And what about health insurance?

    The earlier you start thinking about these questions, the more options you have. But even if retirement is only a few years away, there are still meaningful steps you can take.

    Where retirement income comes from

    Most Americans in retirement draw from some combination of three sources: Social Security benefits, personal savings (like a 401(k) or IRA), and possibly a pension from a former employer.

    Social Security is a monthly check from the federal government based on your lifetime earnings. You can start collecting as early as age 62, but your monthly amount is permanently reduced if you claim before your "full retirement age" (between 66 and 67 for most people today). Waiting until 70 gives you the largest possible monthly payment.

    A 401(k) or IRA is a tax-advantaged savings account. Money grows over time in investments. When you retire, you draw money out — and pay taxes on it at that point (for traditional accounts) or not at all (for Roth accounts, which you paid taxes on upfront).

    Health insurance matters a lot

    Medicare — the federal health insurance program for people 65 and older — does not cover everything. You will likely need a supplemental plan to cover gaps. Understanding Medicare timelines and costs is a key part of retirement planning.

    The 80% rule of thumb

    Financial planners often say you will need about 70–80% of your pre-retirement income each year in retirement, since some expenses (commuting, work clothes, payroll taxes) go away. This is a rough starting point — your actual needs will depend on your health, lifestyle, and where you live.

    Getting help

    A fee-only financial advisor (one who charges a flat fee rather than earning commissions) can create a personalized plan. AARP and the Social Security Administration website (ssa.gov) both offer free retirement planning tools and information.

    Quick Tip: The Social Security Administration provides a free estimate of your future benefits at ssa.gov/myaccount. Create an account to see your personalized numbers.

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    Official Resources

    AARP Life ChangesSenior PlanetGCFGlobal — Digital Skills

    Sources used to create and verify this guide. View all sources →

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