Build a Strong Financial Foundation and Start Saving for Retirement

Retirement might seem far off, but the earlier you start planning, the better. Building a solid financial foundation now gives your money more time to potentially grow through consistent saving and smart investing. That foundation can cover essentials like housing, health care and daily expenses while also supporting the lifestyle you want in retirement. 

Whether you're just starting your career or thinking about winding it down, planning for retirement is essential. Most people stop working at some point, and when that day comes, you’ll want to rely on savings, not stress. In this article, we’ll look at how to assess where you stand, build a strong financial base and craft a savings strategy. 

Creating a Retirement Roadmap 

Once you know where you stand financially, the next step is identifying any gaps between your projected income and expected expenses in retirement. 

Where Do You Stand Now? 

Knowing your current financial position is the first step toward a solid retirement plan. It helps you set realistic goals, make informed decisions and adjust your strategy as life changes. Understanding where you are today makes it easier to track progress and figure out how much you need to save and for how long to work toward your retirement goals. 

Identify Retirement Gaps 

To spot any retirement gaps, start by estimating your future income from sources like savings, investments, pensions and Social Security. Then compare that to what you expect your expenses to be in retirement. If there’s a gap between the two, you’ll know where to focus your efforts. 

Tips for Boosting Your Retirement Savings 

Ready to accelerate your journey to financial freedom? Here are some of the most impactful ways to boost your retirement savings. 

Maximize Your Workplace Retirement Plan 

Your employer-sponsored plan is often the best place to start. The IRS sets annual contribution limits, and aiming to hit them can help grow your nest egg. 

• Standard Contributions (Under 50): For 2025, you can contribute up to $23,500. 
• Catch-Up Contributions: If you're 50 or over, you can contribute an extra $7,500 (totaling $31,000). If you’re 60-63, there's an even higher catch-up of $11,250 (totaling $34,750). These are designed to help you power up your savings as you get closer to retirement. 
• Combined Limits: If you contribute to both a 403(b) and 457(b) plan, you can contribute the standard limit to each plan. 
• Employer + Employee Total: The overall limit for combined employee and employer contributions to a 401(k) or 403(b) is typically $70,000 in 2025 (or $77,500 if you're 50+, or $81,250 if 60-63). 
• 15-Year Rule (403(b) Only): Some 403(b) plans allow long-term employees (15+ years) to contribute an extra $3,000 annually, up to a lifetime max. Check with your plan administrator. 

Tip: Don't forget the employer match! This is essentially "free money." If your company offers matching contributions, make sure you contribute at least enough to get the full match. Aim to save at least 15% of your pre-tax income annually, including any employer match.

Explore Personal Retirement Accounts (IRAs and Roth IRAs) 

Even if you have a workplace plan, an Individual Retirement Account (IRA) can be a great way to save more or diversify. 

• Contribution Limits: In 2025, you can contribute up to $7,000 (under age 50) or $8,000 (age 50 or older) to an IRA. 
• Traditional vs. Roth: 
  • Traditional IRAs offer tax-deferred growth potential (you pay taxes when you withdraw in retirement). Contributions might even be tax-deductible now. Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.
  • Roth IRAs are funded with after-tax money, meaning your qualified withdrawals in retirement are completely tax-free. A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
• Roth IRA Income Limits: Keep in mind that Roth IRAs have income limits. For 2025, if you're single and your modified adjusted gross income (MAGI) is over $165,000, or married filing jointly over $246,000, you may not be eligible to contribute directly. 

Automate Your Savings 

Make saving effortless by setting up automatic transfers from your checking account to your retirement accounts. "Out of sight, out of mind" truly works here, helping you stay consistent and avoid the temptation to spend those dollars elsewhere.

Trim Your Spending 

Every little bit counts! Review your budget and look for "easy wins" to free up cash for retirement savings. 

• Track Your Spending: Know exactly where your money is going. 
• Cut Unnecessary Expenses: Cancel unused subscriptions, cook more at home or choose generic brands, for example. 
• Reduce Debt: Paying down high-interest debt frees up more money for saving. 

Tip: Living within your means is a powerful way to accelerate your journey to financial independence. Small changes can lead to big savings over time.

Rebalance Your Investments 

Once you're saving consistently, it's essential to make sure your investments are working as hard as they can for you.

Review Your Risk Tolerance and Modify Your Portfolio as Needed

Review your accounts and assess your risk tolerance. How much risk are you comfortable taking in exchange for potentially higher returns?

Ensure Your Portfolio is Diversified 

As the saying goes, "Don't put all your eggs in one basket!” It's especially true for investments. A diversified portfolio means spreading your investments across different asset classes (like stocks, bonds and real estate) and within those categories (e.g., investing in various industries like technology, energy, health care, etc., when picking stocks). This helps protect you if one area of the market takes a hit.

That being said, it's important to understand that there is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Look to Lower or Eliminate Unnecessary Fees 

Fees can quietly eat away at your returns over time. According to NerdWallet, the average American could pay over $369,000 in banking and investment fees over their lifetime. Review your accounts and investment products to identify and minimize any hidden or excessive fees. Every dollar saved on fees is another dollar working for your future.

Know the Power of Compounding 

Regular contributions have the potential to grow significantly over time. Part of the reason for this is the power of compounding returns. However, fully harnessing the benefits of compounding requires many decades of patient investing. For example, you might invest in the S&P 500* using an index fund or mutual fund and then not touch the money for 40 or 50 years. 

However, it's important to note that rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.

Understand the Cost of Health Care in Retirement 

Health care is often one of the most unpredictable, yet significant, expenses you might face in retirement. While you can't know your exact costs, it's important to plan with a realistic estimate in mind. 

Anticipating Potential Health Care Costs 

Estimate your health care in costs in retirement by considering these key factors. 

• Health Status: If you have pre-existing health conditions, a lifestyle that is considered risky, or a family history of chronic ailments, the associated costs for health care could be impacted and should be accounted for. 
• Type of Medicare Plans: The type of Medicare plan you choose can impact your coverage and out-of-pocket costs. 
• Where You Live: The cost of living can vary considerably depending on where you choose to retire. 
• Inflation: Increasing inflation over time can impact future medical costs in retirement as it can decrease purchasing power and retirement savings. 
• Your Income: Generally, if you have a higher income, you can expect higher Medicare premiums because of income-related monthly adjustment amounts (IRMAA). 
• Your Age: As you age, the cost of your medical expenses tends to increase, with more frequent doctor visits and hospital stays. 
• Prescription Drugs: For individuals who need numerous prescription drugs, their Medicare Part D premiums and out-of-pocket expenses have the potential to run quite high. 
• Long-Term Care: The cost of long-term care is typically extremely expensive. In 2025, the average cost of long-term care in the United States is around $1,690 per month for adult day care to over $9,000 per month for a private room in a nursing home. Home health services could cost you $75,000 or more. 
• Other Expenses: Plan for other health care expenses such as copayments, coinsurance associated with prescription drugs and medical services and deductibles. 

Build Your Retirement Strategy With a Professional 

With the right guidance and a strong financial foundation, you can build a plan that gives you confidence about your future. A qualified financial consultant can be an invaluable partner, helping you navigate complex options, aimed to maximize your savings potential and work toward staying on track with your retirement goals. 

Ready to Take the Next Step? 

The sooner you start, the more time your money has to grow – and the more confident your retirement can be. 

Schedule a Consultation

Important Disclosures: This article was prepared by LPL Marketing Solutions and Landmark Investment Center

* The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. Indexes are unmanaged and cannot be invested in directly.