How to Build a Retirement Plan: 10 Steps to Save, Invest, and Retire with Confidence

A thorough retirement plan includes the financial and mental preparation required to fulfill your post-career life. However, retirement planning in 2026 looks much different than it did in your parents’ generation. With the higher cost of living, rising inflation, and longer life expectancies, preparing for and transitioning into retirement can feel more complex. Northwestern Mutual recently found nearly half of Americans believe they may outlive their savings, and half of millennials and Gen X anticipate working through retirement.¹ 

Rather than focusing solely on how much you may need in retirement, pre-retirees must also consider a plan that adapts to rising costs, market volatility, and their desired lifestyle. To achieve your goals in retirement, you must consider several factors, such as taxes, inflation, and healthcare spending, especially if you plan to retire in San Diego. 

Retirement planning can help provide financial confidence and remove some of the stress of transitioning into this new life stage. As San Diego financial advisors, we’ve outlined what’s involved in a comprehensive retirement plan.

Start Saving for Your Retirement Today 

While it’s never too early to start saving for retirement, there are instances when it may be too late. We recommend implementing a consistent savings strategy as early as possible and taking advantage of opportunities throughout your prime earning years, such as contributing to an employer-sponsored 401(k) program. Waiting too long to begin saving could extend the number of years you must work or affect your spending and lifestyle.

There are many factors that will influence how much income you’ll need and how confident you’ll feel entering retirement. Consider the lifestyle you want to support, including travel, second homes, hobbies, and healthcare needs. You can then calculate how much income or assets are required to sustain those needs over a 20- to 30-year retirement, adjusted for inflation, market fluctuations, and other factors. With these numbers in mind, you can begin building an investment strategy during your remaining working years that’s aligned with your timeline, withdrawal expectations, taxes, and long-term goals. The following 10 steps outline how to get started.

#1: Estimate Your Retirement Timeline

You’ll need to determine how long your savings need to last. We often plan projections for a 25- to 30-year window; however, it could be longer depending on your health and lifestyle. The longer your window, the more critical it becomes that your plan keeps pace with your evolving needs.

#2: Estimate Your Annual Retirement Expenses

How much you will need to retire is unique to you and depends entirely on your total expenses and desired lifestyle, which is why tracking and being fully aware of your expenses is critical throughout your life.

We help clients ensure they can meet their regular living expenses while considering changing insurance needs, new goals, spending choices such as an annual vacation or downsizing their home, and taxes. Once we know projected expenses, we can develop a retirement income target to help manage cash flow and achieve objectives.

#3: Determine Your Target Bequest

Part of your retirement calculations should also include your target bequest or how much you hope to leave to your heirs or charitable causes. Beyond simply what remains after you pass, a bequest may include funding future generations or creating an endowment. Your intentions will further inform how much to save, a realistic spending budget, and your investments and withdrawal strategies.

#4: Pick the Right Asset Allocation in Retirement

Asset allocation refers to how you spread your portfolio across different asset classes, such as stocks and bonds, based on your time horizon, risk preferences, and goals. Having a diversified mix, rather than relying heavily on any one stock, industry, or asset type, can help minimize risk from various external factors, such as market conditions, while still supporting growth, which is critical in retirement. We recommend working with a financial advisor who can help you define the right mix tailored to your needs, regularly monitor your progress, and make adjustments as your needs or circumstances change.

#5: Determine the Total Savings You Need

Once you’ve estimated your annual expenses, bequest target, and investment returns, you’ll have a clearer picture of the target amount you’ll need to have in your portfolio when you’re no longer working.

#6: Calculate the Years Between Now and Retirement 

If you want to retire at a specific age, you can calculate² how long you need to save and invest until retirement to reach that goal. If you have a longer timeline, you’ll benefit from the power of growth and compound returns, which are reinvested over decades, while a shorter timeline may require more aggressive saving, allocation adjustments, and strategic tax planning.

#7: Choose an Asset Allocation for Your Working Years

Your life stage, income, and cash needs will influence your investment risk preferences. For example, as a young professional, you have more time to manage higher risk and ride out market fluctuations. That’s why we often guide those with a longer runway toward a globally diversified, majority-stock portfolio that offers built-in inflation protection and has historically produced higher returns than cash or bonds over the long term. As you approach retirement, your asset allocation will likely shift toward income preservation, such as lowering risk, exploring additional savings opportunities, or parking some money in a safe, accessible investment vehicle like bonds. 

#8: Determine Your Required Annual Contributions

Now that you’ve defined your savings goal and timeline, you can calculate how much you need to save annually to stay on track and reach that target. Your annual contribution should include what you have already saved and estimated returns based on how many years remain until you reach retirement.

For example, let’s say you want $1.5 million in 20 years and you already have $300,000 saved. With an average 7% return rate, adjusted for inflation, you would need to consistently contribute around $8,500 per year or $650 per month, which may also be adjusted for raises, a more aggressive asset allocation, or a shift in your retirement timeline.

#9: Run a Sensitivity Analysis On Your Retirement Projections

While retirement projections are helpful, variables can impact your savings, such as lower-than-expected returns, higher healthcare costs, inflation, or simply living longer. This is why we run a sensitivity analysis, a stress test to see how your plan will hold up based on various scenarios. Planning for both the best-case and less-ideal scenarios can help you better prepare for what may come later.

#10: Sanity Check Your Entire Retirement Plan

Similarly, we look at historical models, such as past market downturns and other real-world situations, to help our clients determine how well-positioned their entire plan is to changing circumstances. For example, a plan is stronger and more resilient if it can withstand a loss of a spouse’s income or unexpected medical events. Part of this process also involves managing your risk by protecting yourself, your family, and your assets through life, disability, and long-term insurance.

Not Sure Where to Start with Your Retirement Plan?

Whether you have significant assets or are still accumulating wealth, working with a financial advisor for retirement planning near you has several benefits. Planning professionals, like the team at CCMI, can help you build a financial plan and retirement strategy to:

• Work through each of the steps listed above
• Manage your income and portfolio assets
• Consider planned and unplanned events to optimize adaptability
• Implement an efficient withdrawal strategy through various economic and market conditions 
• Help you stay the course or adjust with your total financial picture in mind

We have a proven track record of helping clients transition to retirement in San Diego and around the world and have seen a full spectrum of post-career fulfillment. Typically, the most fulfilled clients have aligned their retirement planning, income, and newfound free time to design a life they genuinely desire. Contact us to learn more about how we help pre-retirees approach their next chapter with confidence.

Sources:

1 Northwestern Mutual. (2026, April 1) Americans Believe They Will Need $1.46 Million to Retire Comfortably, Up More Than 15% Since Last Year, According to Northwestern Mutual 2026 Planning & Progress Study. https://news.northwesternmutual.com/2026-04-01-Americans-Believe-They-Will-Need-1-46-Million-to-Retire-Comfortably,-Up-More-Than-15-Since-Last-Year,-According-to-Northwestern-Mutual-2026-Planning-Progress-Study. 

2 Nerd Wallet. Retirement Calculator. https://www.nerdwallet.com/investing/calculators/retirement-calculator.