Balancing Retirement Planning With Today’s Needs

Retiring successfully and comfortably is a major goal—requiring a lifelong commitment to planning and saving. It’s not without its competition, however. You may have short-term goals to accomplish, like a dream trip or buying a home, spendy hobbies to pursue, or lifestyle needs to maintain. So, how do you prepare effectively and wisely for the future while living to the fullest today?

In this article, we’ll examine the careful balance between prioritizing retirement plans and today’s needs, including details to ponder as you do so. To add perspective, we’ll include the insights of financial advisors with first-hand experience helping clients juggle the future with the present.

Can You Save Without Sacrificing Lifestyle Needs?

While a smart decision, especially if you start young, saving for retirement can feel like putting money away never to see it again. For example, most tax-advantaged accounts (e.g., 401(k)s, 403(b)s, or Roth IRAs) don’t allow you to begin withdrawing money until you turn 59.5 years old. Although you’ll eventually access the funds, it’s natural to wonder what you could do or buy with them today.

In this context, is it possible to save effectively for retirement while affording the life you envision right now? To answer this question, consider the lifestyle you need or envision today and after you stop working, including traveling, spending on hobbies, dining out, or household expenses. With an acute understanding of what you want in both stages of life, you can come closer to an idea of what balance looks like for you.

“Planning for a successful retirement while maintaining your current lifestyle is a delicate balancing act—one that requires intentionality, discipline, and perspective,” explains Melissa Murphy Pavone, CFP^®, CDFA^®, financial advisor and founder of Mindful Financial Partners. “Too often, people either neglect their future in favor of their present needs or sacrifice too much in the now, thinking they’ll enjoy it ‘someday.’”

As Pavone notes, adopting a thoughtful mindset toward the overarching goal of retirement and your life as it is today is critical. “The key is balance—learning from your past, investing in your future, while living in the present,” she says. This may include adjusting and managing spending, understanding your goals and preferences, and working with a financial professional on what smart preparation for short- and long-term objectives looks like for you.

Acknowledge Your Life Stage and Income

As you work through how to approach planning for retirement, it’s important to acknowledge your life stage and income. This will help you grasp how much you can realistically sock away while meeting your present-day needs. These two often coincide and evolve.

For instance, in the beginning stages of your career, you might find yourself working up the ladder and seeing incremental pay increases. Here, you might find it more difficult to save for retirement, especially if you have more financial duties such as student loans, bills, or raising a family. Conversely, if you have either a high income or fewer responsibilities, you may have more freedom to bolster your savings.

If you feel limited by income or your life stage but want to prioritize retirement, consider trade-offs and balance. That may mean thinking deeply about where you believe your money is best—in a retirement or savings account, put toward discretionary expenses, or handling life priorities. After some thought, for example, you might decide it’s better to cut down on eating out and instead redirect funds to a Roth IRA. On the other hand, you might want to save more to reach a nearing goal, like a home purchase.

One method you can use to be more intentional about your saving and spending is a budgeting framework, such as the 50/30/20 rule. With this, you would allocate 50% to basic needs (food and housing), 30% to discretionary purchases, and 20% to savings or debt payments.

Additionally, after establishing a budgeting rule, according to Ryan A. Hughes, founder and portfolio manager at Bull Oak Capital, you can use automatic contributions to your savings or tax-advantaged accounts.

“Setting aside some of your income through automation is one of the most effective ways to reach your retirement goal,” says Hughes. “This helps with the mental burden of having to actively remind yourself that you need to save and invest your money on a monthly or even biweekly basis.”

Ultimately, your position and stage will be important in deciding how much and how often you can save for retirement. By creating a budget or automatically contributing a specific percentage of your pay, you can put yourself in a position to prepare for the future while maintaining funds for current needs and purchases.

Beware of Common Pitfalls

Planning for retirement while juggling lifestyle needs and desires can prove challenging. Without a defined plan and an intention behind decisions, it’s not out of the question to fall prey to common pitfalls, such as overlooking the process altogether, over-devoting yourself to the point of self-deprivation, or losing control of spending habits.

Here’s a closer look at the mistakes to avoid:

Not Realizing the Value of Retirement Saving

Missing the value of consistent saving habits can be a mistake, even if it’s still a long time away. Regularly contributing to retirement vehicles allows funds to grow through compound interest and investing returns. So, though it may feel like you are reducing your monthly income now, you could position yourself to live the life you want when you exit your career.

Further, Hughes points out that you must grapple with the idea that you won’t be able to earn income from a traditional job forever. “Once someone begins to understand that they will not be able to work for the rest of their lives, they understand that retirement should be a priority,” he explains. This creates a sense of urgency to save as much as possible, knowing it will help in the long run.

Lacking a Plan

Prepping for retirement is a lingering goal that often becomes even more of a priority the closer you get to it. Without a plan, however, you could find yourself with fewer income sources to access upon exiting your career, limiting the lifestyle you could potentially enjoy.

In the meantime, even if retiring isn’t top of mind and barely vies against other, more immediate priorities, think about putting together a basic roadmap to keep you in check. This might include something as simple as visualizing your ideal retirement or opening an account, such as an Individual Retirement Account (IRA) or Roth IRA. Taking a first step could put you in the mindset to reflect on your life as it can be rather than just right now.

“We suggest to our clients several things to start thinking about when it comes to their retirement and the lifestyle they want,” says Doug Roller, founder at Crossroads Financial Group. “Assessing your situation, developing new goals, and devising an actionable plan” lets you “effectively prioritize retirement planning while still enjoying the present aspects of life,” he continues.

Sacrificing Too Much Today

Another hazard while establishing a retirement vision is overcommitting to the point where you sacrifice too much of your life today. How might this look? In extreme cases, this might look like depriving yourself or your family of luxuries or experiences to save a few bucks every month or year.

Making drastic sacrifices can be typical for individuals aiming to retire ahead of schedule. For instance, frugality and substantial, strict saving are hallmarks of the “Financial Independence, Retire Early” (FIRE) movement. But doing this constantly could lead to burnout and unhappiness over time, leaving you to wonder what you could’ve done or experienced instead.

“Financial well-being isn’t just about the future—it’s about balance,” Pavone advises. “I’ve seen clients who scrimp and save to retire early, only to realize they’ve missed out on life experiences along the way. The goal is not deprivation but smart trade-offs.”

Underestimating Retirement Savings

Finally, even if you understand the value of setting aside money for retirement, how do you know how much to save? Hughes points out that “most people underestimate how much they should be saving” for life after work. He adds that people “assume that if they set aside 5%-10%, they should be fine” but that this is usually “not the case,” possibly falling under the recommended amount.

“Common rule-of-thumb figures are somewhere between 10%-20% of your gross income,” Hughes says. “However, this figure depends on a number of factors, including your time horizon, your post-retirement spending habits, and how well your investments will perform.”

Bottom Line and How a Financial Advisor Can Help

Saving for retirement—while an important goal that deserves constant attention—doesn’t have to take away the experiences and priorities of today. Rather, as noted, it’s key to approach your savings and current spending with poise and proper planning. Consider how you can build a budget that fits your needs, avoid sacrificing too much for future goals, and still save the right amount.

Balancing your present day with a retirement plan is easier said than done. It requires careful analysis and planning, which can be downright hard and time-consuming for the average person to accomplish. Therefore, if you’re unsure where to start or have more complex circumstances, it’s a good idea to consult a financial advisor to help lighten the burden.

A qualified financial professional will be able to help explain what a roadmap to retirement may look like, help you craft a budget, and offer an impartial perspective on how to maintain a balanced financial outlook. Specifically, look for advisors who practice under a fiduciary duty and have experience with retirement planning, as those with the former characteristic will put your interests first. This may include professionals with the following reputable credentials:

• Certified Financial Planner (CFP)
• Chartered Financial Consultant (ChFC)
• Chartered Retirement Planning Counselor (CRPC)
• Retirement Income Certified Professional (RICP)

To find a professional with the expertise to help you plan for retirement, we recommend using a free matching tool, such as this one. It will ask you a short list of questions about your circumstances and connect you with a vetted fiduciary advisor.