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Retirement Income Creation | Top Financial Goals

There’s more than one way to prepare for retirement.

Funding retirement is a hot topic for Americans. In a recent survey, Employee Benefit Research Institute (EBRI) asked workers aged 25 and older to name their highest-priority, long-term financial goals.

Not surprisingly, retirement-related goals topped the list. Specifically, respondents said they wanted to save and invest, plan for future healthcare needs, and strategize for retirement income.

The data comes from EBRI’s 2022 Retirement Confidence Survey. The survey collected responses from 2,677 Americans aged 25 and older in total, including 1,545 working adults and 1,132 retirees. While both workers and retirees weighed in on their top financial goals, the response metrics noted below are specific to working adults.

Could your retirement plan benefit from saving and investing, healthcare planning, and retirement income creation? If yes, keep reading to learn easy success steps for each of these goals.

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1. Saving and investing

Six of 10 workers cited saving and investing as a top financial priority. If you share that goal, take these steps to maximize your results in this area.

  1. Create a budget for your living expenses. Your budget earmarks funds monthly for saving and investing. As well, the process of documenting expenses often reveals areas where you can cut back. For example, you might uncover subscriptions you don’t need. Or, you might realize you can live without spending $10 weekly on fountain sodas. Add up those cutbacks and reallocate the funds to your retirement plan.
  1. Automate your investing. Set up a 401(k) or an IRA for automatic deposits. If that’s already in place, look to increase your contributions and/or optimize your investment picks. Low-fee, large-cap index funds are popular, as are target-date funds. Going forward, plan on increasing your contributions at least once annually.

  2. Don’t deviate from your plan. Sticking with your plan long-term is the only reliable way to reach big wealth goals. Don’t let turbulent markets or other short-term circumstances distract you.

2. Planning for future healthcare needs

About one-third (36%) of workers wanted to plan for future healthcare needs. A good plan here involves contributing (more) to a Health Savings Account or HSA.

If you have a high-deductible health plan, you can make 2022 HSA contributions up to $3,650 as an individual or up to $7,300 if you have family health coverage. You’d then invest those funds and let them grow over time — with the goal of building a nice pot of money that’s earmarked for healthcare costs in retirement.

Contributing to an HSA is a no-brainer if you’re eligible; the account lets you use tax-free money to pay your medical bills. Your HSA contributions are pre-tax, the investment earnings are tax-deferred, and withdrawals for medical expenses are tax-free.

Once you turn 65, you can also take taxable HSA withdrawals for any purpose without penalty. So if you don’t need the money for healthcare in retirement, you can simply use it for something else.

3. Strategizing for retirement income

Three of 10 workers said they needed to build out income streams for retirement. You can tackle this goal in a few different ways, such as:

  1. Dividend stocks. Invest in dividend-paying stocks or funds over time. Reinvest the dividend income while you’re working to grow your earnings potential faster. You can switch to cash dividends once you retire.
  2. Fixed-income funds. Fixed-income funds invest in debt securities. Repayments on the underlying debt fund the income paid out to you as a shareholder. Lean toward lower-risk funds so you don’t sacrifice reliability for higher yields.
  3. Annuities. An annuity is an income stream you can buy. You pay a sum upfront — all at once or in installments — and receive a guaranteed series of cash payments in return. Know that annuities can be complicated and expensive. Research your options carefully.
  4. Business income. A small business that can eventually operate without you is another option. You might start an e-commerce store or blog that you can later turn over to an employee, for example.

Top retirement goals

The top three financial goals among American workers are interesting as a reference point — but they also create a nice framework for a multifaceted retirement plan. Saving and investing over time provide a basic level of financial security. You can up-level your outlook from there by planning for future healthcare costs and developing an extra income stream (or two).

The financial work you do in these areas today creates the foundation for a relaxed, low-stress retirement tomorrow.

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