Design Your Future: Build the Blueprint for Your Ideal Retirement
A Comprehensive Guide for Retirement Plan Participants
Whether you're just starting your career, in the midst of your peak earning years, or approaching retirement, this course provides foundational knowledge to help you make informed decisions about your financial future. Throughout this course, you will learn how to envision your retirement lifestyle and understand the various retirement account types available to you.
What You'll Learn
- How to define meaningful retirement goals that align with your values and lifestyle preferences
- The key differences between 401(k), 403(b), 457(b), and IRA accounts
- Traditional vs. Roth contributions: which approach works best for your situation
- Practical action steps you can take today to improve your retirement readiness
Picture Your Retirement
Define Goals and Lifestyle
Why Vision Matters
Before diving into dollars and cents, take time to envision your ideal retirement. How do you want to spend your days after you stop working? This isn't just a daydreaming exercise—defining your retirement lifestyle and goals will shape every financial decision you make along the way.
Research consistently shows that people with clear retirement goals save more effectively and feel more confident about their future. A study by the Employee Benefit Research Institute found that workers who have calculated how much they need to save are significantly more likely to report feeling confident about retirement.
The Cost of Different Lifestyles
Your retirement vision directly impacts how much you'll need to save. Consider these examples:
| Lifestyle Type | Annual Cost Estimate* | 25-Year Total |
|---|---|---|
| Basic/Modest | $40,000 - $50,000 | $1.0M - $1.25M |
| Comfortable | $60,000 - $80,000 | $1.5M - $2.0M |
| Active/Travel | $80,000 - $100,000 | $2.0M - $2.5M |
| Luxury | $120,000+ | $3.0M+ |
*Assumes no Social Security income; actual needs will vary based on inflation, healthcare costs, and other income sources.
Key Questions to Ask Yourself
Take time to thoughtfully consider each of these questions. Your answers will form the foundation of your retirement plan:
Location and Housing
- Where do I want to live in retirement? Will I stay in my current home, downsize, or relocate?
- Do I want to live closer to family, in a warmer climate, or in a location with lower cost of living?
- Will I own my home outright, continue paying a mortgage, or rent?
- Have I considered the impact of property taxes, state income taxes, and cost of living in different locations?
Timing and Work
- At what age do I want to retire? Retiring at 55 means funding 10+ more years than retiring at 65.
- Will I work part-time in retirement? Even modest part-time income can significantly reduce how much you need to withdraw from savings.
- Do I have career skills that could translate into consulting or freelance work?
- Am I open to "phased retirement"—gradually reducing hours rather than stopping work entirely?
Activities and Purpose
- What activities or hobbies will I pursue? Some hobbies (gardening, reading) are free, while others (golf, travel, boating) require substantial budgets.
- Do I plan to volunteer or engage in community activities?
- Will I pursue educational opportunities, such as auditing college courses or learning new skills?
- What will give my days structure and meaning once I no longer have work responsibilities?
Family and Relationships
- Do I want to help support children or grandchildren financially?
- Will I be providing caregiving for aging parents or other family members?
- How will my retirement plans align with my spouse's or partner's goals and timeline?
The "Right" Time to Retire
The "right" time to retire isn't a fixed number—it's when you feel both financially and emotionally prepared. Financial readiness means having enough saved to support your lifestyle. Emotional readiness means having a clear sense of purpose and activities to fill your days.
Many people find that they retire "to" something rather than "from" something. Having positive goals for retirement—not just escape from work—often leads to greater satisfaction in retirement.
Key Insight
People who retire with a clear vision and purpose report significantly higher life satisfaction than those who simply stop working without a plan.
Understanding Your Retirement Account Options
401(k)s, 403(b)s, 457(b)s, IRAs and More
The Retirement Savings Landscape
The U.S. retirement system offers various savings plans, each with its own advantages and rules. Understanding these options allows you to make strategic decisions about where to direct your savings. Most people will have access to at least one employer-sponsored plan and can also open individual retirement accounts (IRAs) on their own.
Employer-Sponsored Plans
401(k) Plans
The 401(k) is the most common workplace retirement plan in the private sector. Named after the section of the tax code that created it, this plan allows employees to contribute a portion of their paycheck either before taxes (traditional) or after taxes (Roth).
- 2026 Contribution Limit: $24,500 (employee contributions)
- Catch-Up Contribution (age 50+): Additional $8,000
- SECURE Act 2.0 Enhanced Catch-Up (ages 60-63): Additional $11,250 (starting 2025)
- Many employers offer matching contributions—often 50% to 100% of your contribution up to a certain percentage of salary
403(b) Plans
The 403(b) plan serves employees of public schools, colleges, universities, churches, and certain nonprofits. These plans operate similarly to 401(k)s but were originally limited to annuity investments. Today, most 403(b) plans offer mutual funds as well.
- Same contribution limits as 401(k) plans
- Some long-tenured employees may qualify for additional "15-year rule" contributions
- Often available to employees who work part-time (such as adjunct professors)
457(b) Plans
The 457(b) plan is available to state and local government employees and some nonprofit organizations. These plans have a unique advantage: you can contribute to both a 457(b) and a 401(k) or 403(b) if your employer offers multiple plans.
- Same base contribution limits as 401(k)/403(b)
- Special catch-up: If you're within 3 years of normal retirement age, you may contribute up to double the annual limit
- No 10% early withdrawal penalty before age 59½ (though income taxes still apply)
Comparing Employer Plans at a Glance
| Feature | 401(k) | 403(b) | 457(b) |
|---|---|---|---|
| Available To | Private sector employees | Nonprofits, schools, churches | Government, some nonprofits |
| 2026 Contribution Limit | $24,500 | $24,500 | $24,500 |
| Age 50+ Catch-Up | $8,000 | $8,000 | $8,000* |
| Ages 60-63 Enhanced | $11,250 | $11,250 | $11,250 |
| Early Withdrawal Penalty | Yes (before 59½) | Yes (before 59½) | No |
*457(b) plans have an alternative "final 3-year" catch-up option that may allow higher contributions.
Individual Retirement Accounts (IRAs)
In addition to workplace plans, you can open an Individual Retirement Account (IRA) on your own through most banks, brokerage firms, or mutual fund companies. IRAs offer more investment choices than most employer plans, though contribution limits are lower.
Traditional IRA
- 2026 Contribution Limit: $7,500 ($8,600 if age 50+)
- Contributions may be tax-deductible depending on your income and whether you have a workplace plan
- Withdrawals in retirement are taxed as ordinary income
- Required Minimum Distributions (RMDs) must begin at age 73 (or 75 starting in 2033)
Roth IRA
- Same contribution limits as Traditional IRA
- Contributions are made with after-tax dollars (no immediate tax deduction)
- Qualified withdrawals in retirement are completely tax-free
- No RMDs during the owner's lifetime—great for estate planning
- Income limits apply: Single filers with income above $153,000 and married filers above $242,000 (2026) face reduced or eliminated contribution eligibility
Traditional vs. Roth: Which Is Right for You?
One of the most important decisions you'll make is whether to contribute on a traditional (pre-tax) or Roth (after-tax) basis. Here's how to think about it:
Consider Traditional (Pre-Tax) If:
- You're in a high tax bracket now and expect to be in a lower bracket in retirement
- You need to reduce your current taxable income
- You're in your peak earning years (typically ages 45-60)
- You live in a high-tax state now but plan to retire in a low-tax or no-income-tax state
Consider Roth (After-Tax) If:
- You're early in your career and likely in a lower tax bracket now than you will be later
- You expect tax rates to be higher in the future
- You want tax-free income in retirement for flexibility
- You want to leave tax-free assets to your heirs
- You've already maximized traditional contributions and want to diversify your tax exposure
The Case for Both
Many financial advisors recommend having both traditional and Roth savings. This "tax diversification" gives you flexibility in retirement to manage your tax bracket by choosing which accounts to withdraw from each year.
Building Your Savings Strategy
Strategies for Every Stage of Your Career
For Early-Career Savers (Ages 20-35)
Time is your greatest asset. Even small contributions can grow substantially over a 30-40 year career thanks to compound growth.
- Start immediately: Even 3-5% of your salary makes a difference when you have decades for it to grow
- Capture the full employer match: This is free money that doubles your effective contribution
- Consider Roth contributions: You're likely in a lower tax bracket now than you will be later
- Increase your contribution rate by 1% each year or with each raise
- If you have student loans, check if your employer offers student loan matching
Example: The Power of Starting Early
Sarah starts contributing $200/month at age 25. Assuming 7% average annual returns:
- At age 65, she'll have approximately $525,000
- If she waited until age 35 to start, she'd have only about $244,000—less than half!
- The 10-year head start more than doubles her ending balance
For Mid-Career Savers (Ages 35-50)
These are often your peak earning years—and the time to maximize contributions.
- Aim to contribute 15% or more of your income (including employer match)
- If you receive bonuses, consider contributing a higher percentage to your retirement plan
- Balance traditional and Roth contributions for tax diversification
- Review and rebalance your investment allocation annually
- As you approach 50, prepare to take advantage of catch-up contributions
For Pre-Retirees (Ages 50+)
The home stretch is your opportunity to maximize savings and fine-tune your strategy.
- Take full advantage of catch-up contributions ($8,000 extra in 2026)
- If you're ages 60-63, use the SECURE Act 2.0 enhanced catch-up
- Begin shifting investments toward more conservative allocations
- Estimate your Social Security benefits and determine your optimal claiming age
- Consider healthcare costs—Medicare doesn't cover everything
- Develop a withdrawal strategy that minimizes taxes
Contribution Limits at a Glance (2026)
| Account Type | Standard Limit | Age 50+ Catch-Up | Ages 60-63 Enhanced |
|---|---|---|---|
| 401(k), 403(b), 457(b) | $24,500 | +$8,000 | +$11,250 |
| Traditional/Roth IRA | $7,500 | +$1,100 | N/A |
Concrete Steps to Take This Week
Put Your Knowledge Into Action
Immediate Actions (This Week)
Now that you've completed this course, it's time to put your knowledge into action. Use this checklist to make progress on your retirement planning. We recommend tackling at least 2-3 items within the next 7 days.
Define Your Retirement Vision
Spend 15-20 minutes writing down your answers to the vision questions in Lesson 1. Where will you live? What will you do? At what age do you want to retire? Keep this document and review it annually.
Check Your Current Contribution Rate
Log into your retirement plan account or check your pay stub to confirm how much you're currently contributing. Is it enough to get the full employer match? If not, increase your contribution today.
Review Your Investment Mix
Look at how your money is invested. Is your allocation appropriate for your age and risk tolerance? Consider using a target-date fund if you prefer a "set it and forget it" approach.
Update Your Beneficiaries
Verify that your beneficiary designations are current. Life changes (marriage, divorce, births, deaths) may mean your designations need updating. This takes just a few minutes but is critically important.
Short-Term Actions (This Month)
Increase Your Contribution Rate
If you're not at 15% yet (including employer match), commit to increasing by at least 1-2%. Many plans allow you to set automatic annual increases.
Evaluate Traditional vs. Roth
Based on what you learned, does your current traditional/Roth mix make sense? Consider splitting contributions or shifting based on your tax situation and expectations.
Talk to a Retirement Plan Specialist
Schedule a one-on-one consultation with a Retirement Plan Specialist to review your current savings strategy, discuss how recent legislative changes may benefit you, and get personalized guidance tailored to your specific financial situation and retirement goals.
Ongoing Actions
Schedule Annual Reviews
Set a calendar reminder to review your retirement accounts at least once per year. Check contribution rates, investment performance, and whether your strategy still aligns with your goals.
Increase Contributions with Raises
Each time you receive a raise, increase your retirement contribution. If you get a 3% raise, put at least 1-2% toward retirement. You'll boost savings without feeling the impact on your take-home pay.
Stay Informed
Continue with Quarters 2-4 of this education series. Tax laws and retirement rules change frequently—ongoing education helps you adapt your strategy.
Congratulations on completing Quarter 1!
You've taken an important step toward securing your financial future. Remember to implement the action items and review this material as needed.