4 Retirement Planning Steps Middle-Class Americans Should Take in 2025
Written by
J. Arky
Edited by
Jenna Klaverweiden
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If you are part of the middle class, planning ahead is crucial to set yourself up for financial success in terms of your retirement. There are sure to be ample opportunities to boost savings and contribute to 401(k)s and other retirement plans in the coming year, as well as maximize your strategy for how to best utilize retirement funds and Social Security.
There’s never a bad time to make a resolution for retirement success, even if it isn’t quite the new year yet. GOBankingRates asked some financial experts about the best retirement tips for the middle class, and they came back with these retirement-planning steps middle-class Americans should take in 2025.
Start Early
The best thing you can do is start early, even if you have to start small, according to Richard Barrington, a financial analyst for Credit Sesame.
“Not only can starting early allow you to benefit from more years of investment growth, it also lets you amass more years’ worth of retirement plan contributions,” Barrington said. “Think of this as spreading the burden of retirement savings over a greater number of years. It’s easier to save up a retirement nest egg over the course of 40 years than it is to try to do it in 10 or 20 years.”
Outline Your Plan
When you are trying to save for retirement, life tends to get in the way. Something that middle-class Americans can do is draw up blueprints for how 2025 can get them on the path to retirement.
“You don’t have to have a detailed plan in order to start saving, but you should do some basic projections before you get too many years into your career,” Barrington said. “This will tell you how much you’ll need to save to support the type of retirement lifestyle you want. This can work like GPS does for a car trip — you’re more likely to reach your destination if you have directions for where you’re heading.”
Team Up With a Financial Planner
The new year is also a great time to consider getting a financial planner to help you with retirement planning.
“Working with a financial planner that is a fiduciary and required to put your interests first is a good idea at any age but especially if you’re within 10 years of your anticipated retirement date,” said Mitch Strobel, CFP, a financial advisor at Armstrong, Fleming & Moore. “A financial planner can help maximize your retirement income by doing a thorough review of your full financial picture, including any goals you have, and provide insights and recommendations based on their experience and full spectrum of knowledge on investments, taxes, retirement income, estate planning rules, etc.”
Start (or Grow) a Cash Reserve
A common recommendation from financial advisors is to save at least three months’ worth of expenses, according to Strobel. Holding some cash reserves is a good strategy for those in the middle class planning for retirement, as it ensures one emergency won’t derail finances or retirement plans.
It’s also crucial to think about where you’re holding that cash.
“Given how much interest rates and inflation have risen over the past few years, we believe it’s important to be regularly monitoring those reserve levels and to make sure that you’re earning a sufficient level of interest on those reserves and not just holding all that cash in a checking account that’s paying very little,” Strobel said. “Many money market funds are still paying over 4% interest and are often liquid same day when emergency expenses pop up.”
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