Retirement Planning for St. Louis Retirees and Pre-Retirees

Setting up a retirement plan involves several steps:

• Start With Your Employer: Check if your company offers a 401(k), 403(b), or similar plan. Enroll as soon as you're eligible, especially if your employer matches contributions—that's free money you don't want to miss. Fill out the enrollment forms through your HR department or benefits portal.
• Open an Individual Retirement Account (IRA or Roth): If you don't have an employer plan or want to save more, open an IRA or Roth at a bank, brokerage, or investment firm. Choose between a traditional IRA (tax deduction now, taxed later) or a Roth IRA (no deduction now, tax-free withdrawals later). The process takes about 15-30 minutes online.
• Self-Employed Options: If you work for yourself, consider a SEP-IRA or Solo 401(k). These allow much higher contribution limits than regular IRAs. You can set these up through most major investment platforms.
• Choose Your Investments: Select how your money gets invested—stocks, bonds, mutual funds, or target-date funds. Think diversification. Target-date funds are simple: pick one with a year close to your expected retirement, and it automatically adjusts, reducing risk over time.
• Set Up Automatic Contributions: Arrange automatic transfers from your paycheck or bank account. Start with whatever you can afford, even if it's just $50 a month. Increase the amount annually or whenever you get a raise.
• Complete Required Paperwork: Name your beneficiaries—the people who inherit the account if something happens to you. Keep this updated as your life changes.

Collaborating with a financial advisor that offers financial planning advice throughout this process can help you make informed decisions and potentially gain peace of mind about your future.

Unlike federal workers, who retire under a defined pension formula known as FERS, most private-sector employees build retirement income for themselves. This doesn’t necessarily affect when they can retire, but it makes the calculation more nuanced. There are two factors to consider:

The “Replacement Rate”

Americans can typically retire when they have sufficient retirement income to cover 70% of their pre-retirement earnings. This is known as the “replacement rate”; it is based on the assumption that retirement reduces living costs, as retirees tend to pay lower taxes and can eliminate previous expenses such as work-related travel, retirement savings, education, mortgage, and similar costs.

What does that mean for your total retirement income? Most private-sector employees draw retirement income from two main sources: Social Security and personal savings, typically a 401(k), IRA, or Roth. Social Security typically replaces around 40% of pre-retirement income for average earners¹; your savings therefore need to cover whatever Social Security doesn’t, which is likely to be roughly 30%.

Planners use a 4% “rule of thumb”: most retirees can withdraw 4% of their savings as income each year without running out over the course of their retirement. So, you need a pot large enough that 4% of it equals around 30% of your pre-retirement income.

The Savings Calculation

To find your retirement savings goal, calculate exactly how much of your pre-retirement earnings Social Security will cover; the number will typically be lower for higher earners. Then calculate how much more you will need to reach 70% of your pre-retirement earnings.

Now divide that annual shortfall by 0.04: a $30,000/year gap requires roughly $750,000 in savings. That gives you a ballpark retirement savings goal. Once you reach it, you give yourself an opportunity to consider retirement.

When to retire is very personal. A 4% distribution rate from your retirement savings may not be enough to meet your monthly or annual expenses. This is where partnering with a financial advisor offering financial planning advice could benefit you to understand your financial status and strategies to help maximize your retirement journey.

Multi-generational financial planning looks at your family's financial picture as a whole—not just a single individual’s finances. It considers parents, children, and grandchildren together. This approach helps you identify and achieve financial goals across generations, such as aiming to preserve family wealth or the legacy of a family business estate.

This requires significant coordination with a trusted advisor. Your advisor will typically start by understanding your complete family situation. They'll ask about everyone who depends on you financially and who might need your support in the future. This conversation helps identify priorities and potential conflicts.

Next, they create strategies that address multiple generations at once:

• Estate planning to protect your children's inheritance during divorce
• Education funding that works alongside retirement savings
• Long-term care planning for parents that doesn't derail your goals
• Tax strategies that benefit the whole family

Financial advisors can usually provide a wide range of strategies to safely transfer wealth across multiple generations. A few common examples include:

• Gifting Strategies: Give up to $19,000 per person, for the 2026 tax year, annually without tax consequences. Pay medical or education bills directly to providers with no limits.
• Trusts: Irrevocable trusts remove assets from your estate while controlling distributions to heirs. Generation-skipping trusts transfer wealth directly to grandchildren, potentially avoiding a layer of estate taxes.
• Education Funding: 529 plans offer tax-advantaged college savings with high contribution limits. These accounts can be transferred between family members if plans change. Unused 529 money can be converted to a Roth IRA to jump start retirement savings for children and grandchildren.
• Life Insurance: Policies provide tax-free death benefits to heirs. They also create cash to pay estate taxes without selling family assets.
• Business Succession: Transfer family business ownership gradually through gifts or structured sales. Valuation discounts can reduce the taxable value of transferred shares.
• Charitable Giving: Donor-advised funds provide immediate tax deductions while allowing distributions over time. Charitable remainder trusts provide you with income now and benefit charities later.

Inheritance planning is the process of deciding how your assets will be distributed to your heirs after you die. It involves creating legal documents like wills and trusts, minimizing taxes on your estate, and ensuring your wishes are clearly documented. The goal is to transfer your wealth smoothly to the next generation while avoiding family conflicts and reducing the financial burden on your loved ones.

The first step is to recognize that retirement planning is a long road. You need a clear direction and a purpose; there must be some vision for retirement that underpins the plan. We generally start the process by asking clients to imagine themselves in five years: where are they, and what would make them thrilled to be there?

Once you have that destination in mind, the retirement planning process follows a few common steps:

• Assess Your Current Situation: Figure out how much you're currently saving and what you already have. Calculate your expected expenses in retirement and when you want to retire.
• Set Clear Goals: Determine how much income you'll need in retirement. Most experts suggest aiming for 70-80% of your pre-retirement income.
• Choose Your Accounts: Enroll in your employer's 401(k) or 403(b) if available, especially if they offer matching contributions. Open an IRA, traditional or Roth, for additional tax-advantaged savings. For high income earners unable to fund a Roth directly, consider Back Door Roth Conversions.
• Start Contributing: Begin with whatever amount you can afford, even if it's small. Try to increase contributions over time, aiming for at least 10-15% of your income.
• Select Investments: Choose a mix of stocks, bonds, and other assets based on your age and risk tolerance. Diversification is important. Target-date funds are a simple option that automatically adjusts risk as you near retirement.
• Review Regularly: Check your progress annually and adjust contributions or investments as needed. Life changes, such as marriage, children, or job changes, should trigger a plan review.

Many advisors suggest you’ll need a retirement income of roughly 70% of your pre-retirement income to maintain your lifestyle. You will have fewer financial obligations, such as retirement savings and work-related expenses. Take 70% of your pre-retirement income, multiplied by the number of years you expect to live in retirement. You must take into consideration personal and family health history. Understand any retirement benefits to collect, such as Social Security or a pension, and the payouts based on age. For many people, this will help them remain financially comfortable. But there is an important caveat.

Your retirement income needs depend on the lifestyle you envision. You must consider whether you will have debt payments, such as a mortgage, car loan, or credit card debt, in retirement. Are you wanting home renovations in retirement? Are you going to downsize? Do you want to travel? Would you like to leave a large inheritance to your children? All these factors will change how much you need to save—and when you’re ready to leave the workforce. It also impacts when and how you can spend your retirement savings.

What “enough” means in retirement is different to everyone.