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Hello, baby boomers and seniors! As we approach 2025, the financial landscape continues to evolve. With market fluctuations, inflation and rising health care costs, building a retirement plan that offers both security and sustainability has never been more important. Whether you’re nearing retirement or already living it, creating a retirement plan that supports your goals without jeopardizing your savings is essential for long-term peace of mind.

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In this article, we will show you how to build a safe and sustainable retirement plan for the year 2025. Paying attention to stability, income and long-term growth, one can build a strategy that will see them through the years of retirement with financial security.

Step 1: Understand your retirement goals and timeline

The first step in creating a sustainable retirement plan is to understand what you want from retirement. Some want to travel the world, while others may just want to have a quiet life, closer to family. Do you plan to continue working part-time or volunteer? What about health care costs, legacy planning and other long-term goals?

Let these personal factors be your guide to such decisions. Take some time to write down your retirement goals, considering both your current and future needs. Your timeline will also play a big role in shaping your plan. If you’re in your 50s or 60s, you may want to focus more on wealth preservation and income generation. If you’re already in retirement, ensuring that your income lasts for decades to come will be your priority.

Tip: Regularly go back and revisit your goals as life circumstances change. That’s the key to a sustainable retirement plan.

Step 2: Assess your current financial situation

You will first need to have a clear picture of your current financial situation before you can build a retirement plan for 2025. Take stock of all income sources, assets, debts and expenses. It includes reviewing any retirement accounts such as IRAs, 401(k)s, pensions, Social Security benefits and other savings.

Equally important is understanding your monthly and yearly expenses, both now and in the future. While some costs may decrease in retirement (such as commuting), others, such as healthcare, will increase. Consider adding up housing and utilities, food, insurance and any intended discretionary spending, such as travel or hobbies.

Tip: Set up a thorough budget representative of your current living expenses. This will help to estimate how much income you’ll need in retirement and point out some potential gaps.

Step 3: Plan for safe money

The main concern in retirement planning is safety — closer to your retirement, shifting more from aggressive growth to preserving what you’ve saved and making sure you have steady, reliable income. Market ups and downs can seriously affect your savings, and you do not want to get caught off guard in case there is a market downtrend.

Other examples of safe money strategies include fixed-rate investments, bonds and certificates of deposit, or CDs. These provide stability, though with less risk, meaning smaller returns. Such investments will protect your principal while yielding moderate returns.

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You can also consider principal-protected investments, which guarantee you’ll get back at least your original investment. While these options may not offer the high growth potential of stocks, they’re a great way to ensure that your retirement savings are protected.

Tip: If you’re worried about market fluctuations, consider products that offer guaranteed returns or provide a predictable income stream, such as fixed-income investments or fixed-rate accounts.

Step 4: Plan for health care costs

Healthcare is one of the biggest retirement challenges, and costs are only expected to rise with age. Some health care costs are covered under Medicare, but by no means does it pay for everything. Long-term care, prescription drugs, vision and dental costs can add up in no time.

Health care expenses should be factored into any sustainable retirement plan. This is all about understanding your Medicare coverage, while one considers other options such as Medicare Supplement Plans or Long-Term Care Insurance. It will also be wise to consider a pool of funds for out-of-pocket costs since these could be substantial.

Tip: Consider health care planning in advance by guesstimating health expenses going forward and investigating additional insurance options. Starting an HSA can also be a good way to plan for medical expenses while getting some tax advantages.

Step 5: Build a sustainable income strategy

The creation of a sustainable income strategy is central to any successful retirement plan. The goal is to create a predictable stream of income that covers one’s expenses without drawing too heavily from savings. Consider sources that will be generating income for you: social security, pensions, rental income and retirement account withdrawals.

Consider diversified withdrawal strategies for the longevity of your income. One bucket strategy involves dividing retirement savings into three “buckets,” which are based on when you need the funds for spending in retirement:

Bucket 1: Short-term (0-5 years) — Investments in safe, liquid assets to cover immediate expenses.
Bucket 2: Mid-term (5-10 years) — Moderate-risk investments that provide some growth potential.
Bucket 3: Long-term (10-plus years) — Growth-oriented investments that can provide significant returns, but which aren’t needed for immediate income.

This approach allows you to tap into lower-risk investments in the early years of retirement while letting your long-term investments continue to grow.

How much to withdraw: Be a little conservative with the amount that you withdraw each year. Take out no more than 4% annually so you may depend on having the money for quite a period.

Step 6: Taking care of inflation

Inflation is another critical factor to consider when planning for retirement. Even if your income stays the same, inflation will gradually reduce the purchasing power of your money. Over time, this means you’ll need more money to cover the same expenses.

Inflation-protected securities, like TIPS, can help you retain your purchasing power in retirement. You might also consider including some growth-oriented investments to outpace inflation in your portfolio, particularly if you’re planning a long retirement.

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Tip: Include investments in your portfolio that have historically outpaced inflation, such as dividend-paying stocks or real estate, to ensure your income keeps pace with rising costs.

Step 7: Review and adjust your plan regularly

Going into 2025, it’s a great idea to keep close attention on your retirement plan and adjust where necessary. Life has changed, and through the various retirement years, your finances might shift. You may change spending habits, change health or experience an enormous market fluctuation.

Regularly review your financial situation to ensure that your plan is still on track. If you’ve experienced a major life event (such as a medical issue or the birth of a grandchild), it may be time to revisit your goals and make adjustments to your strategy.

Tip: Schedule an annual review of your retirement plan with a financial advisor to ensure you’re staying on course. Make adjustments as needed based on changing circumstances.

Conclusion

The building blocks for a safe and sustainable retirement plan in 2025 will be based on understanding one’s goals and financial situation, prioritizing safe money strategies and creating a sustainable income stream. You can keep your retirement plan secure and able to adapt to future needs by factoring in health care costs, inflation and regular monitoring.

Take the time to reevaluate your retirement strategy now, and take proactive steps to safeguard your financial future. With the right planning in place, you’ll be ready to enjoy the retirement you’ve worked so hard to achieve — stress-free and financially secure.

Lyle Boss, The REAL BOSS Financial, endorsed by Glenn Beck as the premier retirement advisor for Utah and the Mountain West states. Boss Financial, 955 Chambers St., Suite 250, Ogden, UT 84403. Telephone: 801-475-9400.