TL;DR: This is a thread about retirement. And how to plan for it. Here’s what we’re covering: Why retirement plans are not one-size-fits-all; Envisioning your retirement dream; the 3As of retirement (amount, account, & asset mix); the power of doing 1% more; creating a real-life financial plan; + some bonus tips if you’re feeling extra. Let’s get you to a place where you feel confident to take on retirement.

The power of a plan—designed just for you.

Everyone has their own vision for retirement and a unique path to get there. A personalized plan can help you work toward your unique long-term goals while balancing short-term priorities.  

Now, let’s start to think about what your unique future will look like.

It's hard to plan for the future if you don’t know where you’re going.

Think about it—you probably wouldn’t plan a vacation without picking a destination first. Retirement is the same way. It’s easier to plan for when you have a general idea of where you’re headed.

Planning for retirement is as much about now as it is about the future.

Time out. Before we dive in, let’s level set on this whole planning for retirement thing...

• ELI25: You don’t need to know exactly what you want to do yet. But an idea of the “who, what, where, and when” will help you create a plan to look forward to.

• ELI35: You still don’t need to know exactly how you’ll spend the future. But if you haven’t started saving for it, thinking about what you want later on in life can kickstart your plan (and your savings).

• ELI45: Gut check: this is kinda the halfway point of your career. Picturing how you want to retire can help motivate you to save more for it. And now’s the time.

No matter where you’re at, a plan for the future can actually help you enjoy life more right now.

Here are 3 questions to help you picture what your future might look like:

‍1. Who are you planning for?

Yourself? Kids? Grandkids? Pets?

There’s no right answer. Knowing what and also who is important to you will help you better understand how much you might want to save.

2. What do you actually want to do?

To work or not to work... To travel far or stay close to home... To open the matcha ice cream parlor or just enjoy eating it...

Thinking about your future day-to-day can help you figure out how much you might need. Which can help you figure out your saving and investing strategies. Which can help you figure out when you can retire. Which is the whole point of this.

3. Got more goals than just retirement?

Wanna buy a home? Save for education? Take a dream vacation?

Planning can help you prioritize your goals for the future so you can live life with less FOMO right now.

Time is a key ingredient in building retirement savings.

Go from dreaming about retirement to working toward it. Think about how the expenses of your current lifestyle and budget might grow or need to shrink. The more you’re able to save and invest early on, the more time that money will have to potentially grow. Which means, the better off you may be in retirement.

Once you have a rough idea of your expenses, it’ll be time to start picturing yourself retired and make a plan.

Quick... can you name the 3As of a retirement plan?

Need a lifeline? We can help. The basics of a retirement plan are made up of 3 As: Amount, Account, and Asset Mix. Not sure where to start? Need a quick refresher? Let’s go.

A quick 3 As primer:

• Amount: aim to save at least 15% of pre-tax income each year toward retirement.

• Account: 401(k)s, 403(b)s, HSAs, IRAs, Roth IRAs – take advantage of what you can for tax-deferred or tax-free growth potential.

• Asset Mix: diversify your investments depending on how long you have to invest.

Everything you need to know about: Amount

Saving 15% of your pretax income might seem like a lot, especially if you’re not saving much right now. It’s all good. You can work your way up to 15%. AND that 15% includes any match or profit sharing.

Here’s an example:

Say you make $50K. Employer match on your 401(k) is 100% of 6% pay. (i.e., your company matches your contributions dollar-for-dollar, up to 6% of your salary).

*You don’t need to contribute all 15% if your employer chips in.

Consider saving as much as possible as early as possible. And if you didn’t? It’s OK. You could make up for it by taking advantage of any opportunity to max out your 401(k). AND you may be able to contribute more than 15% of your income.

15% not in the budget? That’s OK too. If you have an employer match, try to contribute enough to get that. (It’s basically “free” money.) Then invest more as you can. Keep scrolling to see how even 1% more, or as little as $100/yr, could add up to thousands in the future

Everything you need to know about: Accounts

An account is where you save (and invest) your money. Retirement savings accounts include 401(k)s, 403(b)s, and IRAs.

There are tax-deferred accounts and tax-free accounts. Both can be useful to know and have:

• Tax-deferred means you’ll pay taxes on the money when you take it out of the account.

• Tax-free means you’ve paid taxes on the money now and you’ll pay no taxes when you take it out of the account, provided it is a qualified withdrawal.

• There are benefits to both.

With a traditional 401(k) or an IRA, your contributions are tax-deferred. Meaning you pay taxes on your withdrawals once you’re in retirement. The benefit? You could reduce your taxable income now, which reduced your tax bill in the year you make the contribution, if you’re eligible, based on your annual income.

With a Roth 401(k) or IRA, contributions are made after taxes. You generally don’t have to pay taxes when you withdraw from your Roth 401(k) or Roth IRA.

Traditional, Roth, or both? To figure out which is right for you, there are many factors to consider. For many, the answer comes down to a simple question: am I better off paying taxes now or later? Here’s more on how to compare your account options.

Note: You may have also heard your dad/mom/uncle/neighbor talking about an HSA as a retirement account. If you have a high deductible health plan, you might be able to take advantage of an HSA, or a health savings account. It’s a way to save for some medical expenses now ~and~ in retirement. If you're all set with the other retirement savings accounts, you can read up on HSAs.

Everything you need to know about: Asset Mix

An asset mix refers to the way you invest the money you’re contributing to your retirement accounts. You can choose from mutual funds, exchange-traded funds (ETFs), CDs, bonds, or individual stocks. Choosing different investments is a way to diversify your portfolio (the investments you have.)

To choose an asset mix, you’ll consider how long you have to invest (your time horizon), how you feel about risk, and your own financial circumstances, including whether you want to manage your own investments or have someone manage them for you.

As a general rule, the more time you have to save, the greater percentage of your money can be allocated to stocks. Closer to retirement? Stocks may still be OK. Given that retirement these days may last for decades, your money might still need to grow for many years after you retire. (Don’t worry, there are options that make it easy to adjust your asset mix over time to align with your goals. Read on for more.)

Data source: Fidelity Investments and Morningstar Inc. 2024 (1926–2023). Past performance is no guarantee of future results. Returns include the reinvestment of dividends and other earnings. This chart is for illustrative purposes only. It is not possible to invest directly in an index. Time periods for best and worst returns are based on calendar year. For information on the indexes used to construct this table see Data Source in the notes below. The purpose of the target asset mixes is to show how target asset mixes may be created with different risk and return characteristics to help meet a participant's goals. You should choose your own investments based on your particular objectives and situation. Remember, you may change how your account is invested. Be sure to review your decisions periodically to make sure they are still consistent with your goals. You should also consider any investments you may have outside the plan when making your investment choices.

Let’s talk about risk. Investing inherently involves risk. When choosing your asset mix, you should be able to feel comfortable riding the ups and downs of the stock market. Feeling comfortable in your asset mix can make you less likely to panic when stocks fall. (Selling low can lock in losses, making it harder to reach your goals.)

How long you have to save can affect your asset mix. You want to make sure that your mix reflects how long you’ll be invested and any associated need for growth. (In short, some assets may grow faster than others, and some may carry more risk, which is why you need a mix.)

Age is more than a number. It’s a good way to help figure out your asset mix. The longer the time the money will be invested, the more time there is to ride out the market’s ups & downs. So, as a general rule, the younger you are, the heavier your mix could lean toward stocks, because those potential short-term dips could be less impactful on your long-term goals. 

As you get older, check in on your portfolio. You might want to adjust your mix. Being too aggressive could be risky—you would have less time to recover from a market downturn. However, being too conservative could limit your money’s growth potential.

As you get closer to retirement, it might make sense to reduce the percentage of stocks in your portfolio while increasing investments in bonds and short-term investments.

Want the easiest way to pick a good asset mix? You’ve got a few options. If you don’t have the time, expertise, or interest in choosing (and maintaining) your asset mix in your IRA you could choose:

• A target date fund, where you pick a fund with the target year closest to your expected retirement. This is a single fund solution that’s designed to gradually (and automatically) adjust the asset mix over time. 

• An asset allocation fund, where a fund manager sets and maintains a fixed asset mix.

• A professionally managed account. One option is a low-cost robo investor. We offer Fidelity Go®. (You can learn more here.)

Some final words on going the DIY asset mix route: A diversified mix of investments is important. You wouldn’t want your portfolio to be dependent on any one type of investment. If you want to do it yourself, consider funds that hold a mix of investments in companies both large and small, from different parts of the world, and in different industries.

Got more Qs? We’ve got more As about retirement’s 3As over here. Even more about investing right here.  And some tools that can help your research your ideal portfolio are here.

Just a little bit more (savings, of course)

Just 1% more can make a big difference. If you can increase your savings by just 1% now, it could mean a lot in retirement...

No matter if it’s $10, $100, or more, saving money early—and consistently—in life can help you live the retirement of your dreams.

Bonus points if you’re able to increase that amount over time.

Adding just 1% more into a tax-advantaged retirement account (think 401(k), 403(b), or IRA) could make a big difference for retirement. While 1% is a small percentage of your paycheck today, after 20 or 30 years, it can make a big difference in your account balance when you retire.

How to find that 1% more

You shouldn’t skip out on buying something you really need. But if you can find an extra $12, $14, or $15 a week, it can make a big difference in your savings. (Little things like skipping the takeout or finding a deal on something you want can help.)

Since 401(k) contributions come right out of your paycheck, you may not even miss the spending money. And if you have an IRA, you can set up automatic deposits (AND investments), so you don’t even have to think about missing that money.

Not feeling a savings bump?

If you can’t increase your savings now, try doing it once a year. Some 401(k)s allow you to set up an automatic increase every year. (Sign up if you can.) Or, if you typically get a raise each year, you could time your savings increase to happen at the same time, so you won’t notice the impact on your paycheck as much.

Wanna read more about how to save more? We’ve got more right here.

What’s a financial plan? (or how to create a financial plan that’ll help you create the life you want now and in retirement.)

Think of a financial plan as a blueprint for managing your money.

First, you’ve got your basics: spending, saving for the future, managing debt, protecting what you have, and estate planning

So where should you start? Well that depends on what’s important to you. Your financial plan should be based on your priorities. And your plan should be flexible, changing with your priorities.

Take it one goal at a time

Ready to build your own financial plan? With the right tools and a process for evaluating your situation and identifying what to do next, you can do just that.

Simply break it down and go one goal at a time. Here’s a 3-step process for doing that.

STEP 1. Pick a goal

To take it one goal at a time, you’ve first got to pick a short- or a long-term goal. Either will work. Your starting point? That’s your current income, any debt, and your spending and savings. Figure out how much you have coming in and going out (aka a budget) so you can see what’s left over (aka what you can save).

Hot tip: Get specific on your goal—like retiring by age 65. Or saving 6 months' salary in 2 years. Research says doing so can improve your odds of success more than picking a general “spend less” or “save more” goal.

STEP 2. See where you stand

Big picture time. With all your financial details in front of you, you can compare them with your goals. This can help you gauge your progress and see how achievable your goals are. It’s also a great way to adjust your priorities, if necessary, and move on to the next phase of planning.

Remember: It’s OK to have more than one savings goal. You might be planning for an upcoming vacation and buying a home at the same time.

STEP 3. Get started (then keep going)

That big picture can help you understand how much you have as opposed to what you might need.

If you see you’re on track for your goals, that’s great. And if you feel behind, a plan can help you stay focused on what matters to you.

Must do: Celebrate your progress, hitting a milestone, achieving a goal. It’ll help keep you motivated to keep going.

Go deeper on all three steps now.

PS: It’s more than OK to find out your savings aren’t on track. It’s actually a good thing to find that out, because it means you have a chance to improve the situation. How will you catch up, though? You could save more, save for a longer time, and check out investment options that could help too.

TIL: Everything I needed to know to take on retirement

If you made it this far... you're ready. It’s time to start planning for your retirement so you can start living life with one less thing to worry about.

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Already have a plan? Let’s put it to the test:

6 questions in 60 seconds. You got this. Get your Fidelity Retirement Score^SM and see where you stand now, plus get steps to get wherever you’re headed next.

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P.S. Now, if you’ve read scanned to the P.S. without dropping everything to check your 401(k) contribution rate, that means you’re probably ready for the more advanced studies in planning for your best retirement ever. Luckily for you, there’s even more you can do.

• ICYMI: Make sure your money is actually invested. Whether you have a retirement plan from work, an IRA, or both, double-check. Here’s a refresher on how to pick investments.

• An HSA could help you save.

• IRA = next level retirement savings. Check to see if you meet the eligibility requirements.

• Can’t get enough? Read more ways to stay on track now.

[LEGAL]

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

This information is intended to be educational and is not tailored to the investment needs of any specific investor.

From Data Source chart: Domestic stocks represented by IA SBBI US Large Stock TR USD Ext Jan 1926-Jan 1987, then by Dow Jones US Total Market data starting Feb 1987 to Present.  Foreign stocks represented by IA SBBI US Large Stock TR USD Ext Jan 1926–Dec 1969, MSCI EAFE Jan 1970-Nov 2000, then MSCI ACWI Ex USA GR USD Dec 2000 to Present. Bonds represented by US Intermediate-Term Government Bond Index Jan 1926–Dec 1975, then Barclays Aggregate Bond Jan 1976 - Present. Short-term/cash represented by 30-day US Treasury bills beginning in Jan 1926 to Present.

Indexes are unmanaged. It is not possible to invest directly in an index.

Past performance is no guarantee of future results.

Diversification and asset allocation do not ensure a profit or guarantee against loss.  

IMPORTANT: The projections or other information generated by Fidelity Retirement Score regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Results may vary with each use and over time.

Fidelity Go® provides discretionary investment management, and in certain circumstances, non-discretionary financial planning, for a fee. Advisory services offered by Fidelity Personal and Workplace Advisors LLC (FPWA), a registered investment adviser. Brokerage services provided by Fidelity Brokerage Services LLC (FBS), and custodial and related services provided by National Financial Services LLC (NFS), each a member NYSE and SIPC. FPWA, FBS and NFS are Fidelity Investments companies.

Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

Fidelity Brokerage Services LLC, Member NYSE, SIPC. 1134944.2.0