Whether you’ve just started investing for retirement or you’re thinking about retirement, you’re probably wondering how much money you’ll need. That number partly depends on the type of lifestyle you want to have in retirement.

Are you planning to downsize your home and move closer to family? Are you looking to keep two residences so that you can be a snowbird in the winter? How much traveling do you want to do? Will you be staying in bare-bones hostels, luxury hotels, or something in between? Is there an RV in your future? These and other lifestyle considerations can help you estimate how much income you need to generate in retirement.
 

Also consider health care costs, which is the largest expense for many retirees. If you or your spouse are planning to retire before age 65, you’ll need to buy your own health insurance before you qualify for Medicare. Once you reach 65, you’ll still have some out-of-pocket expenses for deductibles, premiums, and other costs not covered by Medicare.

Depending on your situation, you may have income from a workplace savings plan like a 401(k) or 403(b), IRAs, pensions, rental properties, or other retirement investments. If you paid into Social Security, you’ll likely have income from that to supplement what you saved while you were working.

How much should you save for retirement? Experts recommend setting aside 10% to 15% of your pretax income, but this might vary depending on whether you or your spouse has a pension or other expected sources of income—and when you start saving. Some people save more than 15%—maybe a lot more if they plan to retire early—allowing them more spending flexibility in their post-working years. 

How to choose the right retirement account

There are many ways to invest for retirement; the ones you choose will depend on your age, career status, financial situation, retirement lifestyle goals, and comfort with investment risk. But wherever you are, the right strategy can pay off. Here are some tips to consider at each stage of your career:

Early career: Build the nest

When you’re just starting out, you might not think about—let alone think you can afford—saving for retirement. But time is on your side. Any money you set aside early in your career will have many years to grow. In fact, thanks to the power of compound interest, the sooner you start saving for retirement, the less you’ll probably have to save to reach your goal. Likewise, the more you invest early on, the better off you’re likely to be later.

Maximize your workplace plan 

If you have a retirement savings plan (like a 401(k), 403(b), or 457(b)) at work, take full advantage of it. These tax-favored plans let you invest in a menu of stock, bond, and other funds. The money comes directly from your paycheck, so you’re less likely to miss it.

With a “traditional” account, you invest pretax dollars and will owe income tax on withdrawals (presumably when you’re retired and in a lower tax bracket). With a Roth account, you invest after-tax dollars—but withdrawals are tax free if you meet certain criteria; this works best if you don’t need a current tax break or expect your bracket to be higher down the road.

In 2025, you can contribute up to $23,500 to a workplace plan ($31,000 if you’ll be at least age 50 by Dec. 31 and $34,750 if you are ages 60 - 63). So enroll as soon as you can, and contribute as much as you can. (If your employer offers a match, save at least enough to earn every extra dollar they’ll give you.) Over time, try to save more.

Open an IRA

If you’ve maxed out on your employer’s plan, want more investment choices, or simply don’t have a plan at work, consider an individual retirement account (IRA). Like workplace plans, traditional IRAs give you a tax break upfront (contributions are tax deductible). Meanwhile, Roth IRAs work with after-tax dollars but offer tax-free withdrawals when you retire. Depending on your income, in 2025 you can contribute up to $7,000 to IRAs ($8,000 if you’ll be 50+ by year-end).

Diversify your investments for retirement

Diversification, or dividing your money among different types of investments, should be a key part of your retirement savings strategy. By “spreading your risk” across a range of asset classes (stocks, bonds, cash, etc.) and subclasses (anything from large-company U.S. stocks to Eastern European government bonds), you insulate your portfolio against severe loss if one investment suddenly loses value.

Mutual funds and exchange-traded funds (ETFs) offer a degree of diversification—each holds dozens, even hundreds or thousands, of investments at once. In particular, low-cost “index” funds, which aim to match the performance of broad sections of the market, can help you save money while mitigating some risk.

Consider a target-date fund

If you don’t want to figure out exactly where to invest for retirement and when to make changes, a target-date fund can do the work for you. These “funds of funds” invest in a range of stock and bond funds, and their holdings gradually shift from more aggressive (stocks) to more conservative (bonds) over time. So, you can simply choose a fund whose target date is closest to the year you plan to retire.