Decade-by-decade playbook
| Stage | Savings target* | Focus |
|---|---|---|
| 20s | — | Build the habit: 401(k) to match, Roth IRA, kill high-interest debt. Time is your superpower — $500/mo from 25 beats $1,000/mo from 35. |
| 30s | 1× salary by 30 | Push toward 15–20% savings rate. Don't let lifestyle inflate with every raise. Get term life + will if kids arrive. |
| 40s | 3× salary by 40 | Peak complexity: college vs retirement (fund retirement first — kids can borrow, you can't). Max accounts; check allocation. |
| 50s | 6× salary by 50 | Catch-up contributions kick in ($8,000 extra on 401(k), $1,100 on IRA). Ages 60–63: super catch-up $11,250. Model Social Security scenarios. |
| 60s | 8× salary by 60 | The "retirement red zone": shift toward preservation, plan the claiming/Medicare/RMD sequence, do Roth conversions in low-income years. |
*Fidelity-style benchmarks — rough guides, not verdicts. Behind? The fix is always the same: save more, spend a bit less, or work a bit longer. All three beat hoping.
Social Security: the claiming decision
Social Security replaces ~40% of average earnings — the foundation, not the house. But when you claim changes your check for life:
- Early (62): ~30% less than full retirement age (FRA), permanently.
- Full retirement age (66–67 depending on birth year): 100% of your earned benefit.
- Delayed (70): ~24–32% more than FRA — an 8%/year guaranteed increase. No benefit to waiting past 70.
- Spousal benefits: up to 50% of your spouse's FRA benefit (reduced if claimed early). Survivor benefits: up to 100% of the deceased's benefit — this is why the higher earner's delay matters so much.
- Earnings test: claim before FRA while still working and benefits are reduced $1 for every $2 earned above ~$23,400 (2026 approx). After FRA, no reduction.
- Taxes: up to 85% of benefits can be taxable depending on "combined income." Roth withdrawals don't count toward it — another reason to build Roth balances.
Check your personal estimate at ssa.gov/myaccount — and verify your earnings record yearly; errors are common and permanent if uncorrected.
Medicare at 65
| Part | Covers | Cost (2026) |
|---|---|---|
| A — Hospital | Inpatient hospital, skilled nursing | Usually $0 premium (10+ years of work history) |
| B — Medical | Doctors, outpatient, preventive | ~$203/month standard; higher incomes pay IRMAA surcharges |
| C — Medicare Advantage | Private bundled alternative to A+B+D | Varies; often $0 premium but narrower networks |
| D — Prescriptions | Drugs | Varies by plan; compare yearly at Medicare.gov |
| Medigap | Supplement covering A/B gaps | $100–300+/month; guaranteed issue only around initial enrollment |
IRMAA: higher earners (MAGI above ~$106k single / $212k joint) pay surcharges on Parts B and D — and it's based on income from two years prior, so plan Roth conversions and capital gains with 65 in mind.
RMDs & Roth conversions
- Required minimum distributions start at 73 (born 1951–1959) or 75 (born 1960+) for traditional 401(k)/IRA money. Miss one and the penalty is up to 25% of what you should've withdrawn.
- The RMD tax bomb: decades of pre-tax growth + RMDs can push you into higher brackets and trigger IRMAA surcharges in your 70s.
- The antidote — Roth conversions in your 60s: the years between retirement and RMDs (often low-income years) are prime time to convert traditional money to Roth "up to the top of your bracket." Pay 12–22% now to avoid 24–32%+ later, and shrink future RMDs.
- Still working at 73+? You can delay 401(k) RMDs from your current employer's plan until you retire (IRAs have no such exception).
The order to spend accounts
The tax-efficient withdrawal sequence for most retirees:
- Taxable brokerage first — harvest long-term gains at 0–15%; let tax-advantaged money compound.
- Traditional 401(k)/IRA to the top of your target bracket — fill low brackets deliberately; convert the rest to Roth.
- Roth last — the longest-compounding, most flexible money. Tap it strategically to avoid bracket jumps, and leave it for heirs (tax-free inheritance).
Layer Social Security timing on top: many households live on portfolio withdrawals from 62–70 while delaying Social Security — effectively "buying" that 8%/year increase with their own savings. Run the numbers; it often wins.
Healthcare before 65
Retiring before Medicare is the #1 budget-buster: ACA premiums for a 60-year-old couple can run $1,500–2,500/month unsubsidized. Strategies: manage MAGI for subsidies (Roth withdrawals and taxable-account basis don't count as income), COBRA as an 18-month bridge (expensive but seamless), or part-time work with benefits. Price your exact scenario at HealthCare.gov before giving notice.
FAQs
Will Social Security still exist when I retire?
Yes — but possibly reduced. Current projections show the trust fund can pay ~75–80% of scheduled benefits after the mid-2030s without reform. Plan as if you'll get 70–75% and treat anything more as upside. Congress has never let benefits lapse and has many levers (tax cap, retirement age, COLA formula).
Should I take Social Security at 62?
Usually no, unless you're in poor health, desperately need the income, or are the lower-earning spouse with a much higher-earning partner delaying. For most healthy people, each year of delay is an 8% raise for life, inflation-adjusted — unbeatable.
How do I avoid RMD problems?
Start Roth conversions in your early 60s (or whenever income dips), keep track of the 73/75 start age, and consider qualified charitable distributions (QCDs) after 70½ — donate RMD money directly to charity and it never hits your taxable income.
What about long-term care costs?
Budget for it: ~70% of 65-year-olds need some care. Options range from LTC insurance (cheapest in your mid-50s) to hybrid life/LTC policies to earmarking $300–500k of your portfolio. See the Insurance guide.