Retirement · February 17, 2022

Planning for Retirement at Each Stage of Life

Building a secure retirement can be a top priority for your comprehensive financial plan. That's why—no matter where you are in your career—participating in your employer-sponsored retirement plan is a prudent long-term decision.

Put your money to work for you

At almost every stage of life, contributing funds to your retirement plan on a consistent basis can build wealth. That's the power of compound interest and time.

  • Compound interest: Compounding occurs when your plan contribution dollars earn returns. Then, that new higher amount is invested, starting the growth cycle again.
  • Time: The time value of money says that a dollar on hand today is worth more than a dollar promised in the future. That's because today's dollar has more time to be invested to earn interest or capital gains.

In a career lasting over 40 years, that's money working 24/7 for you every day of the year. With more years, you hold the key to tremendous wealth-building.

The four life stages of retirement challenges

As the retirement nest egg grows, there are four life stages where people face challenges to free up money for their retirement priorities:

1The early career years

The simple act of starting to put money away for retirement is challenging early in your career. Beginning a new job, relocating to a new city or carrying student loan debt doesn't leave much extra cash. Plus, why would you use money today to save for retirement? That's more than 40 years from now.

Those extra dollars are the most valuable cash you'll ever have. When you save or invest them, you combine the power of time and compound interest to work for you. In a retirement plan, compounding occurs when the dollars you contribute are reinvested back into your account, potentially earning additional returns. In other words, your money constantly works for you—and the sooner you start, the better.

See the difference twenty years makes in this situation. Here's an example of a young person who invests early.

Investment Begins

Annual Investment

Average Annual Return

Value at Age 65

Age 20




Age 45




At age 20, you begin investing $3,000 a year for retirement. Assuming 6% average annual return, you'd have invested $135,000 and accumulated a total of $638,231. At age 45, you'd have invested $60,000, and accumulated a total of $110,357. Even though you'd have invested $75,000 more by starting early, you would have accumulated more than half a million dollars more overall.

As a young investor with significant time ahead, you can:

  • Start small—even small amounts adds up thanks to compounding
  • Increase your contribution in incremental amounts until you hit your plan's limit
  • Redirect money from paid debt, salary increases or a financial windfall to your retirement plan

The additional time you have also gives you the ability to withstand shorter-term volatility to pursue long-term gains. You can invest more aggressively because you have time to recover.

2Homebuilding, marriage and starting a family

Milestones like getting married, buying a home and starting a family all introduce new monetary obligations to manage. Mortgage payments, childcare, home repairs, transportation, additional healthcare and many more also make this list.

During these years, it's tempting to cut your retirement plan contribution and make it up later. It's best to resist this temptation and stay the course because your secure retirement remains a top priority. As you contemplate additional changes, be sure to understand the consequences. Here are a few examples:.

  • Taking time off to raise children can be beneficial to your family, but the lost income and time will be felt long into the future.
  • Leaving the workforce for prolonged periods reduces the money you set aside for retirement. Plus, the size of your Social Security benefits could decrease. If you take a break from your job, consider temporarily increasing your retirement plan contributions before you leave and after you return to make up for the lost time and savings.
  • While you still have many years to retirement, you can remain aggressive in your investment decision. However, review your ability to withstand higher investment risk with your financial consultant before making any decisions.

3Your peak earning years

After 25 years or more on the job, you've accomplished a great deal in your career—and your income reflects this success. But with age and prosperity comes an entirely new set of challenges to manage, including:

  • Raising older children
  • Paying off lingering student loan debt
  • Caring for elderly parents
  • Covering any of your own health issues
  • Higher general expenses
  • Use some of your new raise to increase contributions to your retirement plan
  • Take advantage of catch-up contributions to make up for lost time

Working with a financial professional at this time might be beneficial.

4Preparing to retire

You're almost there. With only a few years before your retirement, it's time to think about how and when you will begin to draw down funds from your account. You might also consider adjusting your investment asset allocation for less risk. At this point, you could speak with your financial professional to answer questions about the following.

  • Healthcare and associated costs
  • Required Minimum Distributions
  • Income-producing investment vehicles
  • Taxes rates and living expenses of your desired location
  • Part-time work or other sources of income
  • Estate planning revisions

Having a solid plan for how much income you'll need in retirement and how to take your distributions in the most tax-advantaged way will ease your mind as you move into retirement.

Additional considerations

Whether you're decades away from retirement or just a few years away, there are some other questions to consider along the way.

Roth versus traditional pre-tax IRA

Review your retirement strategy to determine the plan that works best for you. Do you want the upfront benefit of a deduction, while paying taxes when you withdraw the funds? Or would you prefer to take the tax hit now, and withdraw your money tax-free down the road? When researching your retirement options, look for a traditional versus Roth IRA comparison breakdown.

Taking a loan or hardship withdrawal

If you find yourself in financial difficulty, you may be tempted to take a loan or hardship withdrawal for your account (if allowed). This option should be a last resort because it slows your retirement plan earnings growth and could negatively impact your income tax obligation.

Coordinate retirement planning with other savings and investment efforts.

Review your retirement plan investment mix at least once a year, or as major events—marriage, divorce, birth of child or job change—occur. Review your entire portfolio to make sure it’s still in line with your retirement goals.


Saving for retirement requires thinking about how much you'll contribute and how you'll invest those funds. In addition, the longer you've been putting aside money, the longer it can grow.

As your accounts grow and mature, major life events may change your contributions to, or the amount of risk you're comfortable taking in, your investment portfolio. Your financial professional can help you evaluate your retirement savings to make sure you're saving enough to achieve the lifestyle you want in retirement.

No results found

This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.

Links to third-party websites may have a privacy policy different from First Citizens Bank and may provide less security than this website. First Citizens Bank and its affiliates are not responsible for the products, services and content on any third-party website.

Your investments in securities, annuities and insurance are not insured by the FDIC or any other federal government agency and may lose value. They are not a deposit or other obligation of, or guaranteed by any bank or bank affiliate and are subject to investment risks, including possible loss of the principal amount invested. Past performance does not guarantee future results.

First Citizens Wealth Management is a registered trademark of First Citizens BancShares, Inc. First Citizens Wealth Management products and services are offered by First-Citizens Bank & Trust Company, Member FDIC; First Citizens Investor Services, Inc., Member FINRA and SIPC, an SEC-registered broker-dealer and investment advisor; and First Citizens Asset Management, Inc., an SEC-registered investment advisor.

Brokerage and investment advisory services are offered through First Citizens Investor Services, Inc., Member FINRA and SIPC. First Citizens Asset Management, Inc. provides investment advisory services.

Bank deposit products are offered by First Citizens Bank, Member FDIC.

See more about First Citizens Investor Services, Inc. and our investment professionals at FINRA BrokerCheck.