The definition of financial security changes as we age. The needs and wants of a newly married 30-year-old are, not surprisingly, very different from those of a 70-year-old retiree. There is one thing that stays the same, however: Planning and achieving retirement goals is a lifetime process — one that requires you to first build assets and manage retirement risks for the future, and then to turn those assets into a stream of income in retirement that will last as long as needed. To understand how these steps work throughout life, consider the following:

Stage 1: Saving for retirement 

The key to affording the lifestyle you want in the future is maximizing savings opportunities now. The specific investment strategy used to maximize savings will vary with age.

In general, the younger you are, the more aggressive investments can be.

How can you get on the right retirement path?

1. Build an emergency fund. Aim to set aside at least six months of living expenses in a savings or money market account for emergency needs.

- Advertisement -

2. Make sure of coverage. If you haven’t signed up for health insurance at work, do so at the first opportunity. The same goes for life insurance and/or disability income protection.

3. Prepare a basic estate plan. A will and durable powers of attorney for finances and health care can help ensure your needs and those of loved ones are met should something unforeseen happen.

Stage 2: Approaching retirement (10-15 years before retirement) 

As you approach retirement, begin to focus on lifestyle wants. Financial experts often recommend “practice” for retirement. For example, if you’re thinking about relocating to a warmer climate, try visiting there several times — and not just during high season.

What other key issues should you consider?

1. Take stock of insurance. Make sure coverage is sufficient to maintain your family’s lifestyle should something happen to you. This includes addressing future long-term care needs.

2. Save whatever you can. If you are 50 or older, take advantage of catch-up contributions that allow you to sock away extra money in your employer-sponsored plan and/or IRA.

3. Evaluate portfolios. Make sure assets reflect the current time horizon and risk tolerance.

4. Review and update estate plans. Update the beneficiary designations for insurance, review wills and financial and health care powers of attorney.

Stage 3: Entering retirement (five or fewer years before retirement) 

For many, retirement represents a new and exciting chapter in their lives. To prepare, you’ll need to shift from accumulating assets to creating a plan that turns savings into a steady stream of income. Consider these steps to get started:

1. Create a budget. Calculate needs and wants to determine exactly how much money you’ll need; then identify sources of retirement income. The goal is to match essential expenses with guaranteed sources of income.

2. Research Medicare and other health care options. Also, review the survivor needs as well as possible long-term care protection arrangements.

3. Continue to evaluate portfolios. Make sure asset allocation is aligned with new goals. Keep at least a few growth investments to help protect against inflation and the increasing cost of living.

Stage 4: Living in retirement 

Retirement planning doesn’t end once you stop working. It’s crucial to review retirement plans regularly.

1. Set up an account to manage expenses. Consider putting enough money into a money market account or cash reserve to cover expenses for up to two years.

2. Develop a distribution strategy. Work with a financial professional to determine a reasonable withdrawal rate, then decide which retirement assets to use.

3. Fine-tune asset allocation. Make any needed adjustments to ensure your portfolio continues to reflect your risk profile and life expectancy.

4. Review your estate plan. Take a careful look to make sure your estate plan protects you and your heirs and that it benefits the people and organizations that you intend.

Financial security is the confidence that comes from taking action today to provide for tomorrow. It’s an ongoing process during which you should be disciplined but flexible to adapt to changes. Working with a qualified financial professional can help you manage these decisions as you approach, enter and live in retirement.

This article prepared by Northwestern Mutual with the cooperation of Kevin Kaveney, a managing director with Northwestern Mutual, the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, Wis., and its subsidiaries. Kaveney is based in Colorado Springs. To contact him, call 719-578-4000 or email