How to Set Retirement Goals

A couple is happy for setting retirement goals.

Key Takeaways

  • Retirement goals provide a blueprint and motivation for achieving a better financial future. They make you take action sooner and give you more options.
  • It's important to start with your "why" - the deeper reasons beyond just not having to work anymore. This helps translate your purpose into specific goals.
  • Calculate your current income and expenses, estimate future retirement costs, and decide how much to allocate monthly based on the gap. Use retirement calculators to estimate growth.
  • Set SMART goals that are specific, measurable, achievable, results-focused, and time-sensitive. For example, save $100k by age 30.
  • Simplify the process by automating savings, utilizing workplace accounts like 401(k)s, and diversifying your investments over time as your financial ability grows.

In life, the path to success often starts with a goal — whether you dream of owning a home, opening a business or enjoying a comfortable retirement.

Understanding the importance of goal setting is vital for retirement. It helps you create a road map for your financial future and an actionable plan for getting from where you are today to where you want to be.

If you're not sure about why or how to set retirement goals, here's how to get started. Begin with these key things to consider as you craft your retirement plan.

What Are Retirement Goals?

Retirement goals are financial and personal aims centered on your post-work life. These targets primarily focus on the total amount of money you hope to save for retirement, your desired annual retirement income and the kind of lifestyle you want to live once you're done working.

Setting retirement goals is an essential part of effective retirement planning. Several factors can shape your goals, including whether you want to retire at the traditional retirement age of 65, when you actually started saving for retirement, how long your retirement may last and your current income and expenses. Other factors — such as your risk tolerance as an investor, whether you have access to a 401(k) company match or whether you're age 50 or older and eligible to make catch-up contributions — can affect your retirement savings goals and the pace at which you pursue them.

Everyone has different retirement goals. You may want to retire by 55 instead of 65. You may want to be a nomad in retirement and spend your days traveling the world. You might aim to have $1 million saved for retirement or even more than that so you can leave something behind for your children or grandchildren. Maybe you want to use the financial cushion you've built to pursue a lifelong dream of becoming a published author. These and many other ambitions are all perfectly good goals.

Whether you jot them down on paper, use a retirement savings tracking app or work with a financial professional, it's important to identify your retirement goals as early as possible. You'll also need to set a timeline for accomplishing these goals and identify the actions you need to take to realize your vision for retirement. From there, you then can develop a step-by-step plan to make your retirement dreams a reality.

Why Set Retirement Goals?

It's important to set retirement goals for several reasons:

  • They give you a sense of control. Although you can't control the stock market, you can control how you plan for retirement. Retirement goals are basically the foundation for your finances and lifestyle in retirement. They provide the blueprint and motivation for how you can achieve a better financial future. So many people are unsure of whether they'll even be able to retire — only 40% of nonretirees feel their retirement savings are on track, according to recent Federal Reserve research.1 However, setting retirement goals and doing proper and proactive retirement planning can ease some of this uncertainty and provide proof that you're actually on the right track.
  • They make you take action sooner rather than later. The earlier you understand your "whys" for retirement, the more likely it is you'll take action and begin to save. Time is like rocket fuel when it comes to building retirement savings. The earlier you start saving, the more time your money can potentially grow. Use any retirement calculator , and you'll see that setting a goal to contribute a specific amount to retirement in your 20s or 30s likely will lead to much higher retirement savings at 65 than if you start making contributions in your late 40s or 50s. In this sense, goals are crucial because they hold you accountable and often propel you to take action when you otherwise wouldn't.
  • They give you more options. Pinpointing your retirement goals also allows you to take advantage of different options to build a more holistic retirement savings plan. For example, identifying set goals may nudge you to contribute up to the max to get your company's full 401(k) match. Retirement goals may spur you to seek a new job with an employer that offers a generous 5% or 6% match.2 Or a company that covers a greater share of your health insurance costs, which allows you to save more. Having retirement goals may shape decisions around where you live, leading you to move to an area with a slightly lower cost of living so you can save on housing and child care costs and ramp up your retirement savings. Starting with the end in mind may encourage you to make different decisions that improve your financial health and resilience in the long term.
  • They help you stay the course. Setting retirement goals can help you stay on track when economic volatility makes you nervous about what's happening with your 401(k) or individual retirement account (IRA). They also can serve as your North Star when you're making the financial sacrifices required to enjoy a comfortable retirement.

Retirement Savings Goals By Age

There's no hard-and-fast rule about what you should save for retirement by what age. However, experts generally say you should have the equivalent of your annual salary saved by the time you turn 30. By the time you turn 40, you may want to have saved three times your salary.

For example, if you make $75,000 a year, you can strive to have at least this amount saved by 30 and $225,000 saved by 40. However, you shouldn't feel defeated if you don't. One 2022 Vanguard study found that the investment firm's average account holder had just over $141,000 saved for retirement, and the median balance across accounts was actually $35,000.3 According to BankRate, about half of American workers are confident they can save enough money to have a comfortable retirement.4

These figures showcase the importance of goal setting and having your own clearly defined goals broken down into practical steps you can easily follow. Only you know how much you'll need to have a comfortable retirement. Identifying your goals for retirement in this way can help you understand whether you're on the right track — and, more importantly, what adjustments you need to make to stay on course.

Five Tips for Setting Retirement Goals

1. Start with your "why"

Before you define your goals, it's important to understand why you want to save for retirement. The most obvious answer is so that you no longer have to work as you get older, but try to go deeper than that.

For some people, saving enough for retirement is about having the freedom to pursue their passions and regain control of their time. For these individuals, saving for retirement isn't about opting out of work entirely but rather about doing work they enjoy or volunteering for causes that matter to them. For others, retirement may be about leaving a financial legacy and passing on generational wealth. Either way, identify your "why" and then work from there to translate this "why" into specific goals.

2. Understand where you are

To know where you're going, you have to appreciate where you are.

In the context of retirement, this means you need to understand your current income and expenses and how much you can actually allocate toward retirement savings. This shouldn't require a huge amount of effort or time. You can look at a few months of bank statements to calculate your expenses and subtract this amount from your take-home pay to see how much you have left over to allocate toward savings.

If you don't have very much wiggle room, the next step is to find places where you can cut expenses — or potentially increase your income — to save more.

3. Estimate your retirement expenses

As part of this process, also estimate your expenses in retirement.

In many cases, your retirement expenses will be lower than your current expenses. You likely won't have to pay for child care or college expenses in retirement, and you may have paid down or completely paid off your mortgage by that time.

Factor in any changes you expect to incur when calculating your potential monthly expenses. For example, if you expect your monthly expenses in retirement to be $4,000, this means you'll need to withdraw $48,000 a year from your retirement accounts. The average retirement lasts about 20 years, according to government data.5 So you may need at least $960,000 total in retirement income to cover your expenses.

After calculating your current expenses and estimating your future retirement expenses, decide what to allocate every month for retirement. Use a retirement calculator  to see how your contributions could potentially grow over time. Consider whether the amount you intend to invest now will be enough to cover your expenses later.

4. Set SMART goals

When setting any goal, it's important to not be vague. Using the SMART goal framework can help you clearly define your retirement goals. SMART goals are:

  • Specific
  • Measurable
  • Achievable
  • Results-focused
  • Time-sensitive

With retirement planning, a SMART goal may be setting a goal to retire at 60 with enough money to cover a 30-year retirement. It could be setting a goal to retire by a specific year, or it could be a goal to achieve a certain balance in your retirement accounts by a certain milestone, such as $100,000 by age 30 or $300,000 by age 40. Whatever goal(s) you set, there must be a strategy and actions behind it that involve saving regularly — and balancing your current financial obligations with paying your future self.

5. Simplify the process

Saving for retirement doesn't have to be complex. If you work a traditional job and your employer offers a 401(k), start by contributing to that account — even if you only can contribute a small amount every month.

Simplify the process by automating your savings. You can make pre-tax contributions to a 401(k) or 403(b) plan, which has the added benefit of reducing your taxable income. Keep in mind that these accounts have yearly contribution limits, so depending on when you start saving for retirement, you may need to contribute more on a monthly or yearly basis — or even open a separate IRA — to meet your specific retirement goals. If you're self-employed, you may want to consider opening a solo 401(k), SEP or SIMPLE IRA to save for retirement. Each of these accounts has different contribution limits, rules and tax benefits, so do your research to understand which of these accounts will help you effectively achieve your retirement goals.

Once you get into a regular habit of saving, you can build from there and max out your retirement contributions or open other accounts to have more investment options and enhanced control of your retirement savings outside of an employer-provided plan. For example, you could consider opening a taxable brokerage account for more flexibility. Unlike an IRA or 401(k), a brokerage account doesn't have penalties if you withdraw from it before age 59½. However, there are certain tax implications based on when you withdraw any gains, or profit, from this account.

Diversification is important when saving for retirement. You can always start with the basics and work your way up to build a more diverse retirement portfolio that offers more options and control for your financial future.

Achieving Your Vision for Retirement

Retirement is a long game, but that doesn't mean you should wait until you're close to retirement to start planning for it. Setting goals for retirement early — and adjusting them when necessary — will help you create a solid retirement plan and enable you to leave a lasting financial legacy for yourself and those you love. If you feel you could use a helping hand in charting your course, don't hesitate to contact a financial professional for guidance.

Live More & Worry Less

Live More & Worry Less

We have financial professionals ready to assist you on your retirement journey.


  1. Economic well-being of U.S. households in 2021.
  2. Companies with great retirement plans.
  3. How America saves 2022.
  4. Survey: 56% of Americans feel behind on saving for retirement.
  5. Top 10 ways to prepare for retirement.

Related Retirement Articles


Information provided is general and educational in nature, and all products or services discussed may not be provided by Western & Southern Financial Group or its member companies (“the Company”). The information is not intended to be, and should not be construed as, legal or tax advice. The Company does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. Consult an attorney or tax advisor regarding your specific legal or tax situation.