A few years back, on a late Friday afternoon, five of my colleagues and I were discussing what retirement had in store for us. The conversation was short -- we discovered that our knowledge of company benefits, Social Security, and health-care plans was seriously lacking. One of the guys suggested that we name ourselves the "Old Fools Association," which we laughed about at first. Then we quickly realized that our questions needed answers.

We also knew that we weren't the only ones who'd benefit from those answers, and so we decided to officially form the "Old Fools Association" (OFA) to learn everything we could about a successful retirement plan.

I drew the short straw and was elected chairman -- the "Official Old Fool." (The pay stunk, but the title fit.) The five other initial Old Fools agreed to be the steering committee.

We invited interested co-workers in our approximate age group to participate in our OFA meetings and opened the floor to questions. For instance, were the health, dental, and vision plans available to retirees, and at what cost? What about life insurance and disability insurance? How far in advance of the retirement date must we submit paperwork? Must we withdraw from the company-sponsored 401(k) plan when we retire? Are partial withdrawals allowed? What about spousal health coverage for retirees?

We later involved our human resources department and our local Social Security Administration office, which helped us better understand our retirement benefits. We used email to disseminate our findings. Word quickly spread about our little group, and many more people decided to become Old Fools. The only stipulation for membership was a willingness to share information.

Some OFA members were already working with certified financial planners (CFPs), and when word of our little society spread, my phone began ringing off the wall. The CFPs were eager to describe their services, expertise, and products to a large group of potential customers. It was a good deal for the OFA members -- we got the chance to listen to (and compare) representatives of practically every major financial institution in the area.

A whole lotta learning goin' on
We also spoke with quite a few people about long-term health care. The very real possibility of needing assisted-living or nursing home facilities down the road is worrisome. Many of us have friends or relatives who are in need of care, so we're all eager to gather information about this subject.

We learned that no retirement plan is complete without a will and, in the ideal scenario, an estate plan and living will. This is a daunting process for many who don't want to think about such decisions. But it is a critical step toward retirement.

Members of the OFA occasionally met in between the formal meetings and presentations with outside advisors. We'd discuss our progress and brainstorm questions and topics we'd not yet addressed.

The burning issues
We all had the same question: "When should I retire?" This is where our real education started -- because we had to get the answers on our own. And we realized that this question has several components, including:

1. Why do I want to retire? What will I do? This is the starting point. If you enjoy your job and co-workers, you're in good health, and you're happy, why throw that away? Retirement is a major decision and is, in many cases, irreversible. A few of our OFA members freely admit that while they want to plan for retirement, as long as they feel good about themselves and their jobs they are in no hurry to quit what they've been doing for the past 30 to 40 years. Before you make the decision to retire, make certain that you really want to leave your comfort zone.

If, on the other hand, your job is merely a means to an end, you may be anxious to pursue that goal. Maybe you want to travel, golf, fish, or take up some other hobby. You may wish to spend more time with the grandkids, enter politics, or even pursue another career. Retirement could give you the time to finally write the Great American Novel or go back to college.

The point is: Don't feel as though you must retire just because you reach a certain age or length of service. Follow the adage that says, "We don't quit playing because we get old; we get old because we quit playing." A job keeps us on a schedule and gives us an identity. For some people, their job is their identity -- without it, they feel lost. Having a purpose in life is vital to both mental and physical health. Be absolutely certain you have something to fill the voids of both time and personal esteem.

2. When can I afford to retire? Deciding when to retire is a balancing act -- you must work long enough to build up a nest egg sufficient to accomplish one's retirement goals while still retiring early enough to actually enjoy those goals. There are two retirement scenarios that really scare me. The first scenario involves my wife and me on a park bench worried that we're broke because we retired too soon. In the second scenario, we're on the same park bench, but with my wife hitting me with her cane and cussing at me because I worked long enough to make us multimillionaires -- and we're too old to enjoy the riches.

There are two primary methods to decide when to retire. We call the first method the "Defined Date" method. It demands that you set a fixed retirement date and modify your retirement lifestyle to fit the available income. The second method is called the "Defined Goal" method, and it involves setting desired retirement goals, and then working until the money is available to reach those goals.

The Defined Date method of planning is best suited for those who are willing to accept a more modest standard of living or for those who have meticulously (and successfully) planned for retirement.

A more cautious plan is the Defined Goal plan, which requires us to first decide what we want to do in retirement. Whether it's golfing, puttering in the garden, building a new dream home, or cruising the Caribbean, there is a defined goal. With that goal, you can then project the cost of that lifestyle and formulate a plan on how to accumulate that money. The downside to this method of planning is the possibility of setting the goals so high that you push back retirement.

Most OFA members use a combination of the two methods. We calculate projected income from pension and savings at our company's full retirement age of 59 1/2. We calculate whether that income will support our desired retirement plans, factoring in Social Security at age 62. If we're able to meet or even exceed our goals, some may start thinking about retiring early. If not, we either downsize our retirement lifestyle, decide to work longer to support the lifestyle, or start saving more money.

Running the numbers
To project our financial retirement plan, we developed our own Excel-based spreadsheets. We have the capability to vary proposed retirement ages, expenses, income, investment returns, inflation, taxes, and Social Security, and instantly see the effect on our financial bottom line. It's another tool in our quest to understand what retirement has in store for us.

By working together toward a common goal, the members of the Old Fools Association have educated themselves far beyond the average potential retiree. Some members learned enough to handle their own retirement investments. Others chose to have a financial advisor handle their retirement investments, but they've done so armed with knowledge. Our group knows the advantages of a diversified portfolio, understands how to build bond ladders, and can discuss the 4% safe withdrawal rate.

Before we formed OFA, retirement was something that was just going to happen to us. Now we plan to rule our retirement.

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Fool contributor Glen Kenney is employed by a large Texas Gulf Coast petrochemical company as a process supervisor but plans to be enjoying retirement in about a year. We might see him catering a barbecue at a fair or selling his handmade furniture at the flea market, but if we see him with an actual job, we'll know his wife found the checkbook. He's glad to be named the Official Old Fool, for in leading the group he was forced to educate himself to the point that he's no longer afraid of retiring. The Motley Fool has a disclosure policy.