Retirement planning questions

One day you’ll likely want to close the book on your career and start a new chapter of your life. But do you know how to plan for retirement?

The majority of working Americans say they’re behind on their retirement savings goals, according to a Bankrate survey. If you don’t know how to plan for retirement, you could find yourself in the same position.

A financially comfortable retirement might feel like a big goal, but it’s totally within reach. You just have to learn a few retirement savings concepts.

Take the first step toward confident retirement planning. Ryan Inman, a financial planner, and Andy Wang, managing partner at an investment management firm, are here to help. Below, they share the concepts that you need to grasp if you’re wondering how to learn about retirement planning.

Compound interest’s surprising ability to grow wealth can feel like a magic trick. But it’s actually just good old-fashioned math.

“Compounding is the key to most great investors’ success,” Wang says. That’s because as you earn interest on your money, your money grows. Over time, you earn interest not just on your initial deposit but also on the interest that continually increases.

Because the interest you earn is based on an ever-growing amount of money, your wealth accumulation gets faster as the years go by.

An example can help when you’re learning about retirement planning, especially when math is involved.

Let’s say you put $10,000 into an individual retirement account (IRA) with an average annual return of 6%. This is how compound interest would fuel your money’s growth over the years:

• Year 1: You would make 6% on the $10,000, which is $600.

• Year 2: You would make 6% on your money again, but this time it would be on a balance of $10,600. As a result, you’d add an additional $636 to your account.

• Year 3: You would make 6% on $11,236, or $674.16.

• Year 10: You would have $17,908.48 in your account, thanks to the power of compounding. In a decade, your money grew by almost $8,000—without you having to do a thing.

You can play with the numbers in a compound interest calculator to see for yourself how this works.

Compound interest is important to how you plan for retirement because it yields bigger results over longer periods of time—and saving for retirement is all about the long term.

“The longer your money is invested, the more compound interest grows,” Inman says.

As a result, he says one of the biggest retirement savings mistakes you can make is to put off saving for retirement.

When saving for retirement, Inman and Wang recommend that you make use of any available tax-advantaged accounts (in other words, accounts that save you money on taxes).

Some savers have access to a 401(k) or other employer-sponsored retirement accounts through their jobs. Every American who has earned income can contribute to an individual retirement account (IRA).

Let’s take a closer look at each of these tax-advantaged retirement options to help you understand how to plan for retirement.

The most common plan that is provided by an employer is the 401(k), which allows employees to put a certain amount of each paycheck toward retirement. “The 401(k) is one of the best options you have to save for retirement,” Wang says.

One of the reasons it’s such a great option, he says, is that contributing to a 401(k) can make your tax bill smaller each year.

“The money you contribute doesn’t count toward your gross income for the year, and that lowers your taxable income as a result,” he explains. “For example, let’s say you make $25,000 per year and you contribute $2,000 into your 401(k). As far as the IRS is concerned, you made $23,000 and you’ll only be taxed on the $23,000.”

In addition to lowering your tax bill, your 401(k) is growing your retirement savings thanks to the power of compound interest.

Sometimes employers will also offer what’s known as a 401(k) match. This means they’ll match whatever you add to your retirement savings up to a certain amount.

For example, Inman says that if your employer offers a 3% match and you’re putting in at least 3% of your salary to your 401(k), then your employer will put in an additional amount equal to 3% of your salary.

If your employer offers a 401(k) match and you’re not enrolled, “you’re not only missing out on the tax benefits of a 401(k), but you’re leaving free money on the table,” Inman says.

Inman notes that some companies have vesting periods, which means you won’t receive the full 401(k) match until you are employed with that company for a certain amount of time.

The maximum contribution is the total amount you’re allowed to add to your 401(k) each year. This limit can change year to year according to the latest tax laws. In the 2026 tax year, for example, you could contribute a maximum of $24,500 to your 401(k) account, the IRS says. If you’re over 50, you can take advantage of catch-up contributions—up to an additional $7,500 per year.

Another popular retirement account is the IRA. According to Inman, there are two main types of IRAs, each with a different tax advantage.

Generally speaking, Inman says, a traditional IRA gives you the ability to subtract the amount of money you’re putting in from your taxes now. However, you’ll need to pay taxes on the money you take out in retirement. You can take out your contributions and earnings without IRS penalty at age 59½.

The other type of IRA is the Roth IRA. Inman notes that what you add to a Roth IRA can’t be subtracted from your taxes now. But when you withdraw your earnings in retirement (at age 59½ or later, to avoid a penalty), you do so tax-free. Because you pay taxes on the money you have added, you can withdraw those from your Roth IRA anytime.

“Some earners’ income is too high to qualify for a Roth IRA,” Inman says. (In 2026, the income limit is $169,000 for individuals and $252,000 for married couples filing jointly, according to the IRS.)

Unsure of which type of IRA to choose? Check the latest IRS guidance on income and contribution limits before selecting the best option for you.

If you find yourself thinking about how to plan for retirement but not actually doing the regular saving that you need to, then automating your retirement savings might be for you. That’s because it works in the background without you having to do anything additional.

Inman and Wang note that most 401(k) plans have automation features: Once you sign up and choose your preferences, your plan will deduct a certain dollar amount or percentage out of every paycheck and invest it in the funds you selected.

There are even mobile apps that have been created to make it easier for people to automate their retirement savings. They allow savers to set up automatic deposits from their checking or savings accounts into a retirement savings fund according to their risk tolerance, or comfort-level in potentially losing a certain amount of money, and goals.

“Technology has come a long way in helping us automate our retirement savings,” Inman says.

When considering how to plan for retirement, automating your retirement savings has two important benefits:

The fact is, it’s not always a good experience to move money from your checking account into your retirement savings. Wang notes that when you’re automating your savings, “you won’t even miss that money, but it can grow to a significant amount over time.”

Inman suggests increasing the money you add to your 401(k) whenever you get a raise at work.

You might have noticed that the stock market can be up one day and down the next. These unpredictable swings mean you might buy at a high price just before the prices go down. 

Inman points out that when you’re automating your savings, you’re investing the same amount of money at regular times. So, if the market is up, your retirement savings go up, but you’re buying at higher prices. If the market goes down, your savings go down, but you’re also buying at lower prices.

Over time, your costs average out, which is known as dollar-cost averaging. “Automation is allowing us to dollar-cost average without us even knowing that we’re doing it,” Inman says.

You could use every smart retirement strategy in the book, but how do you know how much you should save before you can retire?

“Conventional wisdom says that you should expect to need 70% to 90% of your annual pre-retirement income in retirement,” Wang says. For example, he says that a person who earns an average of $100,000 per year before they retire should expect to need $70,000 to $90,000 per year after they retire.

Another rule that is used often when learning about retirement planning is known as the 4% rule, Wang says. The idea is that if you can take out no more than 4% each year from your savings in retirement (adjusting for inflation and taxes along the way), then “you should have a very high probability of not outliving your money during a 30-year retirement,” he says.

If a retired person will need to use $80,000 a year, that annual pre-tax income needs to be no more than 4% of their retirement savings. Because 4% is the same as the fraction 1/25, they would need to multiply $80,000 by 25 to reach their retirement savings goal of $2 million.

By studying retirement concepts, you’ve taken the first steps toward how to learn about retirement planning. Starting early and staying consistent with retirement savings helps compound interest work in your favor over time. Using tax-advantaged accounts like 401(k)s and IRAs, especially with employer matches, can boost your long-term savings. And automating contributions and using clear income-based goals can make retirement planning more steady and less stressful.

Now, it’s time to make the moves that your future self will thank you for.

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