Retirement planning doesn’t have to be complicated to be effective. Over decades of market cycles, one truth keeps showing up: the people who build long-term financial strength tend to follow a few core principles consistently.
Here’s what we know based on decades of market data, and here’s how we’ll navigate it together. We can’t control market volatility, tax law changes, or the next headline. But we can control our savings discipline, our investment structure, and our decision-making process.
Below are three basic rules that often form the backbone of a strong retirement plan—along with the specific actions that make them practical in real life. Keep in mind: these are general guidelines, and the “right” targets and tactics depend on your income, goals, benefits, taxes, and timeline.
Rule #1: Save as much as you can—starting now
Savings rate drives results. Not because markets don’t matter, but because your savings rate is one of the few levers you can pull with certainty.
The “10/1/Now” approach
- If you can save at least 10% of your income now, do it. That includes your 401(k), 403(b), IRA contributions—any intentional retirement savings.
- If you can’t get to 10% today, start at your company match. If your employer offers a match, that’s a built-in advantage. Don’t leave it on the table.
- Then increase savings by 1% per year until you reach 10%. This turns progress into a system. You don’t need perfection—you need consistency.
- Once you hit 10%, reevaluate. Maybe 10% is right for you. Maybe you need more due to a later start, earlier retirement target, healthcare needs, or a lifestyle goal. The point is: we reassess with facts, not guesses.
Execution matters: If you rely on willpower, saving becomes optional. If you automate it through payroll deductions and scheduled increases, saving becomes inevitable.
Rule #2: Build a properly diversified portfolio—and understand why it’s built that way
Diversification is not a buzzword. It’s a risk-management tool. The goal isn’t to find the “perfect” investment. The goal is to build a portfolio that can hold up across multiple environments—growth, inflation, recessions, and everything in between.
A properly diversified portfolio typically spreads risk across a mix of investments that don’t all move in the same direction at the same time. That may include different categories of stocks, different types of bonds, and other diversifying exposures depending on your plan, goals, and timeline.
Why understanding your strategy is part of the strategy
Most investing mistakes aren’t mathematical—they’re emotional. When markets drop, people abandon the plan at exactly the wrong moment. When markets soar, people chase what’s hot at exactly the wrong moment.
So we don’t just build a portfolio. We build a portfolio you can stick with.
That means you should be able to answer questions like:
- What is my portfolio designed to do in a strong market?
- What is it designed to do when markets are weak?
- Which parts may be volatile—and which parts are intended to provide stability?
- How does this connect to my retirement timeline?
When you understand the “why,” you’re far less likely to react to noise—and far more likely to follow through on what works over time.
Rule #3: Stay the course—until you’re about five years from retirement
For most of your working years, the right posture is straightforward: stay invested, stay diversified, and keep saving. Your timeline is long enough that market volatility, while uncomfortable, is typically part of the process.
But as you approach retirement, the math changes.
The “critical window” is the five years before retirement
Roughly five years out, you enter a period where the sequence of returns matters more. In plain English: big market swings can have a larger impact when you’re about to start drawing income from your portfolio.
This is where many people make one of two mistakes:
- They don’t adjust anything, assuming the same approach will automatically work in the drawdown years.
- They overcorrect, getting too conservative too quickly, which can create a different long-term risk: not keeping up with inflation or living longer than expected.
This is why I’m direct about it: when you’re about five years from retirement, come see me—or someone like me. Not because you need fancy products. Because you need a retirement transition strategy tailored to your situation.
Why the rules change in retirement
In retirement, you’re no longer just growing wealth—you’re using it. That shift introduces new priorities:
- Income planning: What sources will you draw from first? How do you coordinate Social Security, retirement accounts, and taxable accounts?
- Risk management: How do you handle downturns without locking in losses at the wrong time?
- Tax strategy: Taxes can become one of the biggest controllable “expenses” in retirement, depending on how withdrawals are structured.
- Cash flow clarity: You need a plan for predictable spending, unexpected expenses, and healthcare considerations.
The goal is control. Not predictions. Not perfection. Control.
The bottom line
If you’re looking for a clear framework to pressure-test your retirement plan, these three rules are a strong starting point:
- Save as much as you can—aiming for 10% if possible, starting now. If that’s not realistic today, start at the company match and increase 1% per year until you reach 10%, then reevaluate.
- Diversify with purpose—and understand the “why” so emotions don’t sabotage the plan.
- Stay the course—until you’re about five years from retirement, then shift from accumulation mode to a thoughtful transition plan.
These general guidelines may not be appropriate for everyone, and there may be other factors to consider based on your personal circumstances. If you’re within five years of retirement—or you’re unsure whether you’re on track—let’s get organized. We’ll look at your savings rate, your investment structure, and your timing. Then we’ll build a plan you can follow with confidence.
Investing involves risk, including the potential loss of principal. Diversification does not ensure a profit or protect against loss in declining markets.