Planning to Retire in 2026: A Complete Guide

Many of us look forward to it for decades -- retirement! In this retirement planning guide, we'll cover everything you need to know about the financial side of it. You'll have the information you need to meet your retirement goals and stop working when you want.

Image source: Getty Images.

If your retirement is here or around the corner, you need to read up on a bunch of retirement planning topics, so that you can make smart moves that keep costs down and let your nest egg last as long as possible.

The following topics are covered:

• Healthcare costs: Find out how much you'll need and how to save for it
• Inflation: Learn how to manage how far your money will go over time
• Social Security: Know how much to expect, how to decide when to take it, and how to increase benefits and avoid reductions
• The best-case scenario: You have enough saved to retire
• The medium-case scenario: You have nearly enough saved to retire
• The worst-case scenario: You don't have enough saved to retire
• Annuities: Decide if this type of guaranteed retirement income is right for you
• Early retirement: See if you could call it a career ahead of schedule
• Taxes in retirement: What you need to plan for and how to minimize taxes
• The non-financial side of retirement
• Seeking professional help

Healthcare

Healthcare costs

Find out how much you'll need and how to save for it

Let's start with healthcare costs, as they're easy to overlook, and failing to plan for them can lead to disaster in retirement. Also, they tend to be steep. According to a 2025 estimate from Fidelity, a 65-year-old can expect to spend an average of $172,500 on healthcare and medical expenses during retirement, excluding Medicare and long-term care costs. (A 35-year-old can save that much by socking away about $1,750 in a health savings account (HSA) annually for 30 years, earning a 7% average annual return.)

Fortunately, there are ways to reduce your healthcare costs, such as maintaining a healthy lifestyle and visiting your doctor for preventive screenings and care.

You can also make use of flexible spending accounts (FSAs), which let you sock away up to $3,400 per year (as of 2026) on a pre-tax basis to be spent on qualifying healthcare expenses, such as eyeglasses, dental care, certain medications, and doctor visits. The only catch is that most of that money is in the account on a use-it-or-lose-it basis.

The aforementioned Health Savings Accounts are even better, as unused contributions aren't forfeited. Instead, they can remain in the HSA account and can even be invested -- and in retirement, they can be withdrawn penalty-free to be used for anything (though the money will count as taxable income).

The HSA contribution limit for 2026 is $4,400 for individuals and $8,750 for families. The 2025 HSA contribution limits are $4,300 for individuals and $8,550 for families. Those 55 and older can contribute an additional $1,000 for each of those years. To be able to participate in an HSA, you'll need to have a qualifying high-deductible health insurance plan.

It's also smart to read up on Medicare since it offers a lot of coverage, beginning at age 65. Don't be late to sign up, though, or you may be charged extra for it for the rest of your life.

Inflation

Inflation

Learn how to manage how far your money will go over time

It's important to factor inflation into your retirement planning. After all, if your retirement is 20 years away and you aim to save $1 million for it, that $1 million won't have the same purchasing power in 20 years as it does today.

Over long periods, inflation has averaged about 3% annually, though in some years it can be much higher or lower. That kind of rate can shrink the buying power of your dollar roughly in half over 25 years.

You might combat the effects of inflation by holding a lot of dividend-paying stocks, because those dividends tend to be increased from year to year, helping you keep up with inflation -- and the stock price of the stocks themselves is likely to rise over time, too.

If you have, say, $100,000 invested in dividend payers with an overall average yield of 3%, you'll receive $3,000 in dividend income this year. If those payouts grow by an annual average of 5%, in 10 years, they will be generating close to $4,900 per year.

Other ways to fight inflation include investing in Treasury Inflation-Protected Securities (TIPS) bonds, which adjust their interest rates to account for inflation, and buying annuities with inflation-adjustment features built in.

Social Security

Social Security

Know how much to expect, how to decide when to take it, and how to increase benefits and avoid reductions

It's vital to know how much income you can expect from Social Security, as for most people, it will make up a big chunk of their retirement income. For context, note that the average monthly Social Security retirement benefit check was $2,008 as of August 2025, or approximately $24,000 per year.

Clearly, that's not going to be sufficient for most people, which is why you should start planning, saving, and investing as early as possible. That's just an average, though -- if you earned an above-average income over your working life, you'll collect more.

The maximum benefit for those retiring in 2026 at their full retirement age is $4,152, or nearly $50,000 per year.

To get a better idea of how much you can expect to receive, head over to the Social Security Administration (SSA) website and set up an account. Once you do, you can click in at any time to review the SSA's record of your earnings, year by year, and to see its estimate of your Social Security benefits based on when you claim them.

When can you claim Social Security?

You can claim your benefits as early as age 62 and as late as age 70, with your checks permanently smaller if you claim early and larger if you delay. Remember that if you start collecting your Social Security benefits at age 62, even though your checks might be on the small side, you'll get many more of them than if you start at age 67 or 70.

If you don't like the expected benefits you're seeing for yourself, know that there are various ways to increase your Social Security benefits. For example, the formula to determine benefits is based on your earnings over the 35 years in which you earned the most. So if you only worked for 31 years, it will be incorporating four zeros, which will bring down your benefits.

If you can work a few more years, you'll end up with bigger checks. Even if you've already worked 35 years, if you're earning much more now than you ever did, by working an extra year or two, you'll be able to have a few years' worth of low incomes kicked out and replaced by higher incomes.

Annuities

Annuities

Decide if this type of guaranteed retirement income is right for you

While they may not be right for everyone, annuities could be worth considering for your retirement. By opening an annuity, you can set yourself up to receive regular income for the rest of your life. A downside of them is that the money you spend to buy them is typically gone and won't be around for you to leave to heirs, although this depends on the annuity.

It's generally best to focus on fixed annuities, which can start paying you immediately or on a deferred basis, at a future point that you specify, while avoiding variable annuities and indexed annuities, since they tend to have more restrictive terms and may not be as good a deal.

Learn more about annuities before buying one, but you can get an idea of the kind of income fixed immediate annuities offer from the examples below.

To get an idea of what a deferred annuity might offer, know that a 65-year-old woman would have recently been able to spend $100,000 for an annuity that would start paying her in five years, offering $828 per month for the rest of her life. Deferred annuities can be useful tools to help you avoid running out of money later in life.

In times of higher interest rates, annuity contracts will offer bigger payouts. When rates are low, consider a "laddering" strategy, where you spend just a portion of the amount you want to spend on annuities first, and then spend another portion in a year or two, when you hope interest rates will be higher, and so on.

Early retirement

Early retirement

See if you could call it a career ahead of schedule

While most people have not saved enough for retirement yet, and many enter retirement with too little saved, there's another group of people -- those who have saved and invested aggressively and have a sizable nest egg. Those folks may be able to retire early.

If you're among those ranks and haven't thought of retiring early, give it some consideration. After all, we only live once, and you don't know how long your life will be. You may be able to start collecting Social Security at 62 and retire then (or earlier), with sufficient income to live on -- including ample contingency funds for healthcare and other potential needs. Early retirees tend to be in better health than later retirees, meaning they're more able to be active and enjoy pastimes such as travel, gardening, golf, tennis, and others.

An early retirement may be especially possible for you if you're still quite young. By ramping up your savings and investing, you may reach your retirement goals sooner. The table below shows what might be accomplished:

Image source: Getty Images.

Taxes

Taxes in retirement

What you need to plan for and how to minimize taxes

Another key concern in retirement is taxes. Here's what you need to know:

• Social Security: Your Social Security income may be taxed if your income crosses a certain threshold.
• Traditional IRAs and 401(k) accounts: The traditional forms of these retirement savings accounts allow you to contribute money on a pre-tax basis, thereby reducing your taxable income in the year of contribution. In exchange for that upfront tax break, your withdrawals in retirement will be treated as taxable income. (Note that your tax bracket in retirement may be lower than your bracket when you were working.)
• Roth IRAs and Roth 401(k) accounts: These accounts offer no upfront tax break, but if you play by the rules, you can withdraw money from them in retirement -- tax-free. That's because you were already taxed on the funds you contributed.
• Investment income: Your other investments face taxes, too. Short-term capital gains (from investments held for a year or less) are taxed at your ordinary income tax rate, while long-term capital gains get taxed at 0%, 15%, or 20%. Dividend income from most stocks held for more than 60 days is generally taxed at 0%, 15%, or 20%, as well.
• Interest income: Most interest income is treated as ordinary income and is subject to taxation. Treasury bonds and bills only face federal taxes, while corporate bonds are generally taxable at the federal, state, and local levels. Municipal bonds tend to be tax-free at the federal level.

Retired life

The non-financial side of retirement

As you plan for your retirement, venture outside the financial realm a bit and think about how you will spend your days. Many retirees are surprised to discover that they feel a bit restless and perhaps even depressed once they no longer have the structure of their working days, and they have lost the opportunities to socialize with others that work offers, as well.

Aim to stay active physically and socially when you're retired, and you might start getting into some activities and groups even before you retire, to help make the transition to retirement smoother. Staying fit and healthy can keep you happier, too, and should keep healthcare costs down. Exercise and volunteering are some activities that keep most people's spirits up.

Related retirement topics

Professional advice

Seeking professional help

Finally, since retirement planning is so vital -- and can be so complicated -- don't avoid getting help. It can be well worth employing a financial advisor to review your finances, make recommendations, and help you understand how to best manage your money throughout retirement. A good advisor may even save you much more than you pay for their services. Ask around for strong recommendations of advisors or find a local fee-only advisor via the National Association of Personal Financial Advisors (NAPFA) website.

Don't leave your retirement up to chance, hoping for the best. Spend some time learning about and planning for retirement, in order to enjoy yours fully, with minimal financial stress.