Future-Safe Finances: How To Protect and Grow Your Income in Retirement

While survey results vary, all measures seem to indicate a significant percentage of Americans feel anxious about their ability to retire. For example, according to Northwestern Mutual, 46% of U.S. pre-retirees believe they will not be financially prepared when the time comes.

That may not be surprising in the face of longer lifespans, rising costs, and a volatile stock market, but financial security in retirement is still achievable—with the right habits and strategies. Here are 13 practical tips to help you follow a retirement plan that supports the life you want to live.

Key Takeaways

• Keeping track of your finances is essential for setting informed retirement goals, including how much you need to save.
• Tax-advantaged accounts, like 401(k)s, IRAs, and HSAs, are invaluable for minimizing your lifetime tax liability.
• Diversifying your assets and income streams, such as through asset allocation, side hustles, or annuities, can help reduce risk and hedge against inflation.
• Lowering your expenses, especially by relocating to a more affordable city, can help you save more now and need less later.
• Financial professionals can provide valuable support during periods of complexity, but their fees add up and may cause performance drag.

13 Strategies for a Financially Secure Retirement

1. Track Your Financial Activities and Position

In personal finance, everything starts with understanding your current position. Whether you’re decades away from retirement or rapidly approaching it, knowing where your money is and where it’s going is essential. To make informed decisions, you must keep track of your income, expenses, assets, and debts.

“In my experience advising high-achieving professionals and families, future-proofing retirement income comes down to three pillars: clarity, adaptability, and tax awareness,” said Jason Gilbert, CPA, PFS, founder and managing partner of RGA Investment Advisors.

2. Set Clear Retirement Goals

Intelligent, measurable savings goals are also fundamental to retirement planning. A popular tool for estimating how much you need to save for retirement is the 4% rule. It suggests you can safely withdraw 4% from your investments in the first year after retiring, then withdraw the same amount annually—adjusted for inflation—for roughly 30 years.

To back into your minimum retirement savings with the 4% rule, multiply your annual expenses by 25. For example, if you expect to spend $40,000 per year in retirement, you need about $1 million invested to support your expenses.

Tip

Your lifestyle and spending may shift unpredictably in retirement. Use conservative estimates to build a buffer and help ensure your savings meet your future needs.

3. Plan for Health Care Costs

Health care is one of retirement’s most significant expenses. While there is a significant degree of unpredictability, Fidelity’s latest estimate is that a 65-year-old can expect to spend an average of $165,000 on medical expenses in retirement.

A health savings account (HSA) is one of the best ways to prepare. HSAs are triple tax-advantaged: contributions are tax-deductible, growth is tax-deferred, and withdrawals for qualified medical expenses are tax-free. Withdrawals are also penalty-free before age 65 if you use them for qualified medical expenses.

Tip

To contribute to an HSA, you must be enrolled in a qualified high-deductible health plan (HDHP) and not be enrolled in Medicare. In 2025, the minimum deductible is $1,650 for individuals ($3,300 for families).

4. Maximize 401(k) Contributions

For most Americans, 401(k) plans are the bedrock of retirement savings. As of the end of 2024, Americans held $12.4 trillion in employer-based defined contribution plans, $8.9 trillion of which was in 401(k)s. In addition to tax-deductible contributions and tax-deferred growth, these plans have high contribution limits and often come with an employer match.

Fast Fact:

In 2025, the 401(k) contribution limit is $23,500, plus $7,500 in catch-up contributions for those aged 50 and over.

As a result, maximizing contributions to your 401(k) plan is often one of the most effective ways to build retirement savings throughout your career. To do so, Terry Parham, Jr., MSFP, CFP, co-founder of Innovative Wealth Building, emphasized the importance of mastering the fundamentals.

“Success comes down to developing solid habits,” said Parham. “Prioritize saving, invest consistently, and avoid lifestyle creep as your income rises.”

5. Open and Fund an IRA

Your 401(k) may lead the charge when it comes to retirement savings, but an individual retirement account (IRA) offers superior flexibility. IRAs aren’t tied to an employer, so you don’t have to worry about navigating vesting schedules or rollovers when switching jobs. Typically, they also provide a broader range of investment choices than most workplace plans allow.

Choosing a Roth IRA helps diversify the tax treatment of your savings. Unlike traditional accounts, Roth IRAs are funded with after-tax dollars, which means withdrawals are tax-free. Having both types of accounts can help you reduce your lifetime tax liability with strategic planning.

“One of the simplest but most impactful things we do is help clients be intentional about where they pull money from and when,” said Gilbert. “We build distribution plans that coordinate across account types—pre-tax, Roth, and taxable—and aim to keep clients in the most efficient brackets over time.”

6. Diversify Assets and Income Sources

Diversification is one of the easiest ways to protect your investments and maximize your risk-adjusted return. It involves spreading your savings across asset classes—such as stocks, bonds, and cash equivalents—and diversifying within those classes to reduce your exposure to any one risk. For example, you might hold a mix of U.S. and international stocks to limit your exposure to localized disruptions.

The same idea applies to your income sources. A side hustle or small business can insulate you from the consequences of job loss and bolster your earning power during your working years. If you enjoy it enough to pursue it into retirement, it can also reduce your reliance on your retirement savings and keep you engaged later in life.

7. Automate Your Savings

Maintaining a high savings rate is one of the most powerful ways to ensure you reach your retirement goals. The Financial Independence, Retire Early (FIRE) movement shows how impactful this can be. Some followers save as much as 50%–75% of their annual income and retire decades ahead of schedule.

However, saving consistently can be a challenge for Americans. For instance, savings rates shot up during the COVID-19 pandemic, peaking at roughly 32% in April 2020, but have since returned to their usual baseline of around 4%.

Automating your savings by pre-scheduling transfers to retirement accounts can help you stay disciplined. With a company 401(k), you can even have your employer take the funds out of your paycheck ahead of time, so you’re never tempted to use the money for anything else.

“Paying yourself first is one of the best ways to stay on track, and making small increases over time compounds into real progress,” said Parham.

8. Create an Emergency Fund

An emergency fund is a liquid reserve of money set aside to cover unexpected expenses or provide income support during disruptions. Having one can be invaluable, whether you’re working and suddenly lose your job, or retired and want to avoid drawing from investments after a market downturn.

Experts typically recommend keeping three to nine months of expenses, depending on risk tolerance and income stability. If you’ve been tracking your spending, you can estimate a more personalized target, but for the average U.S. household in 2025, that means your emergency fund should be around $35,000.

Tip

Storing your emergency fund in a high-yield savings account or money market account can help insulate it from inflation and preserve your purchasing power.

9. Consider Delaying Social Security Benefits

You may have concerns over Social Security’s stability, but it still contributes significantly to the typical American’s retirement plan. The average monthly retirement benefit was $1,948.17 in April 2025, enough to cover roughly 30% of the average household’s expenses.

While you can begin taking Social Security as early as age 62, doing so reduces your payment. Waiting until full retirement age—generally between 66 and 67, depending on your birth year—lets you claim 100% of your earned benefit. However, you still must delay until age 70 to maximize the amount. Until then, each additional year you wait beyond your full retirement age provides an 8% increase.

That said, maximizing your benefit isn’t always the right move. If you need the income to cover essential expenses, claiming earlier may be necessary. And even when you can afford to wait, the time value of money means that receiving smaller payments earlier may still be more valuable over your lifetime, depending on your life expectancy.

Tip

Calculating your breakeven age—the age at which the value of delaying benefits overtakes the value of claiming them early—can help you make an informed decision.

10. Consider an Annuity

An annuity is a financial product that offers a stream of guaranteed income, typically for life. For those approaching retirement, buying annuities can provide predictability and peace of mind, especially if you’re looking to supplement your Social Security or make up for the demise of the defined-benefit plan.

Annuities have long had a mixed reputation, criticized for high fees, limited liquidity, and complex contracts. But their popularity is rising, fueled by factors like higher interest rates, longer life expectancies, and increased market volatility. When chosen carefully, modern annuities may help stabilize your income in uncertain times.

“Guaranteed income is foundational for many retirees,” said Parham. “Social Security is the bedrock, and for those lucky enough to have a pension, it’s rarely something they regret. Annuities can serve a similar purpose. They provide an additional stream of income that isn’t tied to market performance.”

11. Hedge Against Inflation

Inflation is the gradual increase in the price of goods and services that reduces your purchasing power over time. While it can be burdensome for all consumers—especially when it exceeds the Federal Reserve’s target of 2% per year—it’s often most concerning to retirees, who may rely on partially or entirely fixed incomes. 

One of the simplest ways to protect yourself from inflation is to maintain an asset allocation that includes growth investments, such as stocks, even in retirement. It’s common to shift to a more conservative portfolio as you age, but over-prioritizing stability can be a costly mistake.

“Inflation is the silent killer,” said Charles Petitjean, CFP. “A fixed income might feel fine today, but 10 or 15 years in, your purchasing power could be seriously eroded. Even in retirement, you still need a portion of your portfolio allocated to longer-term growth.”

12. Find Ways To Reduce Your Spending

Assuming it doesn’t compromise your happiness, health, or relationships, lowering your expenses is one of the best ways to improve your financial position. During your working years, it helps you save more and reach retirement faster. In retirement, it means you need less money to maintain your lifestyle.

If you’re looking for places to tighten your budget, consider starting with the three largest expense categories for the average American household: housing, transportation, and food. Together, they account for a whopping 63% of annual consumer spending.

Relocating can be one of the most efficient ways to reduce all of these costs, especially once you’re no longer tethered to a place of work. Choosing the right retirement destination can help you significantly lower your cost of living—without sacrificing quality of life.

13. Seek Professional Guidance When You Need It

A financial advisor or tax expert is often invaluable when you’re navigating the more complex aspects of retirement planning. They can help you avoid costly mistakes, identify savings opportunities, and personalize your financial strategy.

However, professional advice isn’t always necessary, and it’s certainly never free. In fact, the costs can add up surprisingly quickly, especially when working with an advisor who charges a percentage of assets under management (AUM).

Fast Fact:

A 1% AUM fee on a $100,000 investment that grows just 4% annually will cost you $28,000 over 20 years. If you were to keep that $28,000 invested instead, you would earn an additional $12,000.

What Is the 4% Rule for Retirement Income?

The 4% rule for retirement income suggests you can withdraw 4% from your investments in the first year of retirement, then withdraw the same amount—adjusted for inflation—each year thereafter without depleting your savings for roughly 30 years.

What Is the Three-Bucket Retirement Strategy?

The three-bucket retirement strategy involves separating your retirement portfolio into three buckets with different investment time horizons. For example, that might include short-term (up to four years), medium-term (four to eight years), and long-term buckets (beyond eight years).

What Is the Average Social Security Monthly Payment for a Retiree?

The average monthly retirement benefit was $1,948.17 in April 2025.

The Bottom Line

A financially secure retirement doesn’t happen by accident. It requires strong financial habits, proactive planning, and a long-term investment strategy. But future-proofing your finances doesn’t have to be overwhelming. By starting early, staying consistent, and getting professional help when you need it, you can follow a retirement plan that supports the life you want to lead.