Retirement isn’t just about closing the chapter on your career; it’s the launchpad for an epic new adventure. Whether you're envisioning breezy vacations in tropical locales, dedicating time to mastering a new hobby, or soaking up time with family, turning those dreams into reality requires more than just wishful thinking. You need a game plan—a financial blueprint that ensures your retirement income covers the essentials and powers your dream lifestyle.

Picture Your Dream Retirement Life

What’s your dream retirement like? Will you travel the world, build new artistic skills, or simply relax and enjoy life? 

Visualizing your retirement lifestyle is a crucial first step in the financial planning process. It acts as the compass for everything else. Your retirement account, retirement savings goals, and overall financial decisions should reflect the life you want to lead.

Research shows that 29% of Americans believe their lifestyle will improve after retirement. With the right planning, this can be you. It's not just about covering your basics; it's about aligning your retirement savings to fuel your passions, whether sailing, painting, or simply living stress-free.

Turn Your Dreams into Concrete Goals

Dreaming about the perfect retirement is one thing, but turning those dreams into reality requires clear, actionable goals. The key to a successful retirement plan is taking your vision and breaking it down into specific retirement savings goals that align with your desired lifestyle.

Start by identifying your ideal retirement. Do you envision multiple yearly trips or a quiet life focused on personal hobbies? Each of these dreams has a cost associated with it. 

For example, if traveling is a priority, calculate how much you’ll need to cover flights, hotels, gas, food, etc. each year. On the other hand, if your goals focus more on maintaining your current lifestyle and spending time with family, you may want to plan for the costs of routine home maintenance, as well as unforeseen costs, like increased healthcare costs or providing financial support to your family. 

In being specific about what you want, you can create a clear financial goal.

Assess Your Current Financial Situation

Before diving into retirement planning, you must assess where you stand today. What do your retirement accounts look like right now? How much of your pre-tax income is being funneled into savings each month? Are you saving enough to cover your future retirement income needs? These questions will help guide your next steps as you build your retirement strategy.

Working with a financial advisor is essential at this stage. They’ll evaluate your current salary, help you map out your investment strategy, and advise you on the best investment decisions that align with your retirement timeline. 

Additionally, they can help you with other investments—like stocks, bonds, or real estate—ensuring your portfolio is diversified across asset classes to protect your principal amount and boost your investment returns over time.

Supercharge Your Retirement Savings

Saving for retirement isn’t magic—it’s a mix of discipline, strategy, and taking advantage of opportunities like employer contributions. 

Setting up automatic contributions to your 401(k) or Roth IRA is a simple way to ensure your retirement savings grow steadily. And if your employer offers a company match, grab that free money! It’s an instant boost to your retirement account and retirement savings goals. With approximately 70 million Americans actively using 401(k) plans and accumulating over $7 trillion in assets, it's clear these plans are effective.

If you're approaching retirement age, it’s time to think about catch-up contributions. These are designed for individuals over 50 and enable you to go beyond the standard annual limits on your retirement accounts, helping you compensate for any saving shortfalls. These extra contributions can significantly impact your ability to maintain your desired lifestyle in retirement.

Plan for Taxes in Retirement

Taxes are a major factor in determining how much of your retirement income you get to keep, so it's essential to plan ahead. Contributions to traditional 401(k)s and IRAs are made with pre-tax income and are taxed upon withdrawal, while Roth IRAs and Roth 401(k)s offer tax-free withdrawals since they’re funded with after-tax dollars.

To minimize taxes and maximize your retirement income, consult a tax advisor or financial advisor to structure your withdrawals and manage your tax liabilities efficiently. Planning early for taxes ensures you keep more money working for you during retirement.

Diversify Investments with an Eye on Taxes

As you near retirement, balancing growth with security becomes crucial. That’s why diversifying your portfolio—spreading investments across stocks, bonds, and other asset classes—is key. These investment strategies ensure strong investment returns while minimizing risk.

A financial advisor can guide you through asset allocation, ensuring your investments align with your goals and risk tolerance. They can also help you understand how different investment types are taxed. 

For example, interest from corporate bonds may be taxed as ordinary income, while qualified dividends from stocks might be taxed at a lower rate. The idea is to ensure your portfolio is diversified and tax-efficient, maximizing your potential income and future results.

Create a Rock-Solid Retirement Budget

A solid retirement budget is essential to enjoying a fulfilling retirement. Your budget should cover essential expenses—housing, healthcare, food—and fun stuff like travel and hobbies. Regularly revisiting your budget and making adjustments ensures that your retirement income matches your lifestyle needs.

But, many retirees face unexpected financial challenges. For example, 27% of retirees report that their spending is higher than they can afford, leading to financial strain. Additionally, nine out of ten retirees say inflation has forced them to reduce spending, a factor that must be considered in your planning. A financial advisor can help you create a flexible budget that accounts for inflation and unexpected costs, ensuring you enjoy your golden years without financial worry.

Prepare for Health Care Costs

Healthcare may not be the most glamorous part of retirement, but it’s one of the most important. Even with social security and savings, healthcare costs can seriously bite into your retirement income. Long-term care insurance is worth considering as a safety net for major medical expenses, and factoring in out-of-pocket healthcare costs early on is essential.

Healthcare costs can be significant during retirement, and Fidelity estimates that a 65-year-old couple retiring in 2024 will need around $165,000 to cover these expenses. Your financial advisor can help you plan for healthcare expenses, ensuring you’re covered no matter what life throws at you. They'll help you prepare a retirement budget buffer for unexpected medical bills.

Adjust Your Plan as You Go

Retirement planning isn’t a one-and-done deal—it’s an evolving process. As life changes, so should your plan. This is why periodic meetings with your financial advisor are important. 

Whether it’s shifts in your current income, unexpected expenses, or market fluctuations, your advisor will help you make the necessary adjustments to your portfolio and strategy. This flexibility ensures that you remain on track for a fulfilling retirement.

The Aligned Perspective: How Wealth Managers Can Help Build Your Dream Retirement Plan

Reaching your retirement goals requires more than good intentions— you also need a solid financial plan, strategic savings, and expert advice. By partnering with a financial advisor and staying proactive about your financial decisions, you’ll be well on your way to living the retirement lifestyle you’ve always dreamed of.