Honestly, I never seriously considered retirement until my 40s.

When people talked about 401(k)s, I thought, "It'll take care of itself," and I would just skim through the retirement account reports my company sent every year before tossing them in a drawer.

But now that I'm 55, I realize it's not a topic to put off, especially living in LA.

The retirement structure in the U.S. is fundamentally different from that in Korea. In Korea, the national pension serves as the basic framework, while in the U.S., individuals must build three pillars themselves: Social Security, 401(k), and IRA. How you combine these three can completely change your quality of life in retirement. It's not an automatic system.

First, Social Security. For those born after 1960 like me, the official retirement age is 67. You can start receiving benefits at 62, but that reduces the amount you receive for life, while delaying until 70 significantly increases your monthly benefit.

Ultimately, "when you start receiving it" becomes a strategy in itself. You also need to earn at least 40 credits over a minimum of 10 years to qualify. If you don't meet that, you won't receive anything. I've seen many people who came to the U.S. and did self-employment in between without managing their credits end up surprised later. Plus, the average benefit is around $2,000 a month, which isn't enough to live in LA. This is just the "basic framework."

That's why the 401(k) is crucial. It's a retirement plan offered by employers, and the key is matching contributions. When I contribute, the company adds a certain percentage. That's essentially free money. However, surprisingly, many people don't contribute up to the matching limit. The reason is that they feel it's a loss when they see their paycheck decrease.

I was like that in my early 30s. Looking back, the years I didn't take full advantage of the matching contributions are the ones I regret the most. If I had invested that with compound interest for 20 years, my account balance would be completely different now. Fortunately, the contribution limits for 2025-2026 are quite generous, and if you're over 50, you can also make catch-up contributions. I'm maximizing that limit now that I'm 55.

An IRA is a retirement account that individuals open separately. It can be either Traditional or Roth. Traditional allows you to receive tax benefits now and pay taxes later, while Roth requires you to pay taxes now and withdraw tax-free later.

Choosing between them isn't just a matter of preference; it should be based on your income level and expected tax rate in retirement. I started with Traditional when my income was high, but in recent years, I've been increasing my Roth contributions. The goal is to spread out my tax burden. If I withdraw everything from taxable accounts in retirement, my income tax bracket for that year will spike.

Looking at realistic numbers makes it more tangible. Nowadays, it's said that to maintain a "basic lifestyle" in retirement in the U.S., you need about $5,000 a month, which totals $60,000 a year. But that's the national average, and LA is a different story. Housing costs account for the mid-30% range, and healthcare costs are around 30%, so to match that ratio in LA, you'd need at least $6,000 a month.

If your house is already paid off, it's a bit better, but property taxes and HOA fees can still be significant. Many of my peers are seriously considering leaving LA for Nevada or Texas when they retire. I now understand that this isn't just a silly idea, but a realistic option.

Healthcare costs need to be considered separately. You can enroll in Medicare at 65, but it doesn't cover everything. You have to combine Part B, D, and Medigap or Advantage plans yourself, and dental and vision care are mostly separate. Considering the healthcare costs in LA, if you don't allocate a significant portion of your retirement funds for this, one major illness can really shake your finances.

And one crucial principle: you shouldn't touch your retirement accounts before age 59.5. The moment you withdraw, you incur a 10% penalty plus taxes, and more importantly, you disrupt the compound interest structure. Even if an emergency arises, it's essential not to touch these funds. Therefore, you should maintain an emergency fund and a separate investment account.

These days, not many people completely stop working after retirement. Life expectancy has increased, and prices keep rising.

Statistics show that more than half of the middle class in the U.S. plan to work after age 65 for a reason. I honestly can't say for sure that I'll completely stop working at 67. I think I'll continue doing something, whether it's part-time or consulting.

In conclusion, retirement in the U.S. isn't just about preparing; it's about structuring. Social Security is the foundation, and how consistently you contribute to your 401(k) and IRA, how you diversify your taxable accounts, and whether you've set aside funds for healthcare costs are the four factors that make the biggest difference when you look back at 55.

I still regret not taking this seriously in my 30s and 40s.

So, if there are any readers in their 40s, I want to say one thing: retirement age comes sooner than you think.