Registered Nurse’s Guide to Retirement

Genevieve Carlton, Ph.D.
Updated June 6, 2024
Edited by
It's never too early for a registered nurse to begin thinking about retirement. Check out this guide to learn about the different retirement plans available to RNs.
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More than 1 in 4 registered nurses (RNs) plan to retire or leave the profession in the next five years, according to the 2022 National Nursing Workforce Study.

If you’re nearing retirement or still in the early years of your nursing career, it’s always a smart idea to plan ahead. Understanding your savings options, researching pensions, and investigating employee retirement benefits can set you up for financial freedom in your retirement.

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When Nurses Should Start Saving for Retirement

It’s a good idea to start saving for retirement as soon as possible. The earlier you start saving, the longer your investment period and the more options you will have when you retire.

It’s never too late to start planning for your retirement. Nurses in every stage of their careers must understand the options available through their employers or unions. Building a solid financial nest egg ensures you can retire when and how you want.

How to Set Saving Goals for Retirement

How much will you need to save for retirement? When setting your savings goals, Jim Crider, a financial planner and specialist in early financial independence, tells NurseJournal, “Everything in life requires a decision, mandates tradeoffs, and has an opportunity cost. If you choose one thing, you are, intentionally or unintentionally, giving up another.”

Crider suggests saving 10-15% of your gross monthly income toward retirement, based on average retirement age (approximately 65) and average lifestyle goals. While that figure represents a general rule of thumb, several factors influence just how much you need to start saving. Consider your current expenses and spending habits, family obligations, and what you envision for your future lifestyle options. Learn about any retirement plans offered through your employer or union and when and how much you can contribute.

When setting up your long-term financial goals, consider including other sources of income that may be available to you in the future, such as Social Security benefits, trusts, or other savings accounts.

Choosing Between Retirement Plans

Compensation for nurses consists of more than just salaries. According to the U.S. Bureau of Labor Statistics, 91% of RNs receive retirement benefits from their employees as of March 2023, compared to 73% of workers in other fields.

Given the variety of plans available, RNs may find it challenging to choose the best plan to fit their needs. As Crider points out, “There are loads of types of investing accounts available, and keeping up with what they are, let alone which one(s) to use, can be overwhelming.”

When deciding on an RN retirement plan, your top considerations should be whether your employer matches your contribution, the intended use of the savings account, and the specific tax advantages associated with the plan. Additionally, some types of retirement accounts do not allow early access or will charge you a penalty if you need to withdraw funds before you reach the age of 59.5.

Your employer’s human resources department can provide specific information about retirement plan options and matching policies.

Retirement Plans
Retirement PlanProsCons
401k and 403b
  • Employers often match your contributions as part of your employment package.
  • Most employers set up contributions automatically deducted from your paycheck, making it easier to contribute.
  • You have limited control over how the plan determines investment and distribution rules.
  • You can sometimes only make contributions through your employer after working there for a specific period of time.
  • You will have to pay a penalty if you access your funds early.
Roth IRAs
  • You can make contributions anytime and choose where to hold your account and what kinds of investments to include.
  • You can withdraw your initial contribution anytime, without taxes or penalties.
  • The maximum contribution is lower than for the 401K or 403b.
  • Withdrawals beyond the initial contribution before the age of 59.5 may be subject to taxes and penalties.
Traditional IRAs
  • Traditional IRAs are tax-deferred retirement plans that you control, independent of your employer, similar to Roth IRAs.
  • You receive a tax deduction on your contributions every year.
  • These plans have contribution limits, usually $7,000 per year or $8,000 if 50 or older.
  • If you withdraw funds before age 59.5, you must pay a 10% early withdrawal penalty in addition to income tax.
Health Savings Accounts
  • Health Savings Accounts (HSA) are not subject to income tax; earnings in the account grow tax-free.
  • Unspent funds roll over at the end of the year, available for future healthcare expenses.
  • To qualify for an HSA, you must have a high-deductible healthcare plan, which may lead to a financial burden if you need an expensive medical procedure.
  • You will have to pay a 20% early withdrawal penalty in addition to income tax if you take out funds before the age of 65. After 65, you still must pay taxes but not the penalty.
  • Pensions guarantee payments after retirement without using your other savings.
  • Most employers deduct your pension contribution before deducting taxes, giving you a tax break.
  • You cannot withdraw funds before you reach retirement age.
  • Inflation may outpace your fixed pension income.

Types of Pension Retirement for Nurses

Traditional pension plans, which guarantee a fixed income in retirement, have become less common for nurses and other professionals employed in the private sector. Robert Riedl, a family wealth management executive, attributes the demise of nursing pensions to cost-saving efforts by employers. He tells NurseJournal, “Pension plans are going away because the employer liability and cost of funding a future defined pension payment plan for employees is more expensive than just funding a current year retirement contribution to the employee.”

Despite this trend in healthcare, pensions remain common for nurses employed by state or federal government agencies or large healthcare organizations. Nurses may participate in their union’s pension fund if their bargaining unit has negotiated a contract with their employer.

Pensions with matching employer contributions provide nurses with a relatively easy way to begin saving for retirement. However, financial advisors caution against counting on your pension alone. Melissa Ann Cox, a family-oriented financial planner, tells NurseJournal, “The amount of the benefit is based on a myriad of factors, including the employee’s age, years of service, and salary while employed.” As a rule, nurses should always include other kinds of investments or sources of income in their retirement planning.

Pension benefits may not escape the effects of inflation since many do not adjust for increases in the cost of living. Some state-system employers offer pensions in place of paying into Social Security. In these cases, your pension reduces or entirely replaces Social Security benefits unless you meet specific qualifications. Unlike traditional or Roth IRAs, some pension plans do not offer a survivor benefit option that allows your funds to go to a family member or other designated beneficiary in the event of your death.

Budgeting Tips for Nursing Retirement Goals

All three financial consultants interviewed for this guide stress the importance of constructing a budget that reflects your current priorities but allows for flexibility.

For many nurses, saving for retirement takes a backseat to other pressing obligations, like paying off student loans and daily living expenses. Nurses can get on track for retirement planning by establishing a realistic budget that includes fixed expenses (e.g., loan payments, housing, food) and variable expenses (e.g., clothes, hobbies, dining out, and other fun activities). Once you track your actual expenses, you can better determine how many dollars to allocate to retirement savings.

Crider, Cox, and Riedl all agree on the value of seeking advice from a financial advisor. These professionals can help you understand the options available to you and avoid obstacles so that you invest your money wisely and make accommodations as your needs change.

Frequently Asked Questions: Nursing Retirement Plans

The best retirement plan for nurses depends on your employer’s benefits program. Investing in an employer match program can jump-start your savings. Pension plans for nurses are another good way to plan for retirement.