If you've reached your mid to late 50s, it's time to start making some concrete retirement plans. It's important to start planning out your retirement at least 5 to 10 years in advance, because you may need to do quite a bit of research to find just the right options for your dream retirement.
Write a bucket list
Retirement is the time when you'll finally get to do all the things you've always wanted to do, but didn't have the time or money to manage. So pull out a piece of paper and a pen and start writing down exactly what you want to do. Get as specific as you can for each item: don't just write "travel," write "rent an RV and visit every state in the continental US," "take a cruise around the world," "tour the capitals of Europe," or "explore South America by hot air balloon." Don't worry about practicality or price for now; just let your fantasies fly.
Narrow it down
Once you've written down every goal and dream you can think of, stick the bucket list in a drawer for a day or two and then come back to it with a fresh mind. Look over your list and number it by priority: write a one by the item that you most want to do, write a two by the next most important item, and so on. You probably won't get to do everything on your list, but by prioritizing you can at least make sure that you hit the most important ones.
Consider your resources
Now is the time to start getting practical. First, review your sources of retirement income. Pull up the statements for your 401(k) and IRA accounts, and add up how much money you have in there. Look at your Social Security statement to see how much your monthly benefit will be. Pull up statements for any pensions or other sources of income that you'll enjoy once you retire. Then, add it all up. What you're looking for is a realistic figure for how much you'll have coming in on a monthly and yearly basis (to calculate income from your retirement savings accounts, start by assuming that you can take 3% to 4% per year without exhausting your accounts -- and don't forget RMDs).
Add up expenses
Now that you know how much money will be coming in, you need to also figure out how much will be going out. For now, you want to include only your basic day-to-day expenses; don't worry about the special expenses from your bucket list items. What you're looking for is the minimum expenses you'll face in retirement even if you don't do any of that fun stuff. You can use your current expenses as a starting point and reduce or remove anything that will no longer be an expense in retirement. For example, if you're five years from retiring and your house will be paid off in three more years, you won't have a monthly housing payment in retirement and can remove it from your expenses. You can also use a retirement expense calculator to simplify the math.
Compare income and expenses
Look at your monthly retirement income number and your monthly retirement expense number. If income is higher than expenses, congratulations -- you'll have enough money in retirement to pay your basic expenses with some money left over for fun stuff! If expenses are higher than income, you need to seriously reconsider your retirement plans. Perhaps you can significantly bump up your retirement contributions these last few years, or delay retirement a bit from your original plans. Or you may need to plan on holding down a part-time job at least for the early part of your retirement.
Go back to the bucket list
The income you'll have in retirement over and above what you'll be spending on basic expenses is how much you'll have to pay for all those fabulous plans you wrote down on your bucket list. Look at the top priority item on your list. Will you have enough retirement income (after expenses) to pay for it? If not, you'll need to come up with more income, cut your basic expenses, or reassess your priorities. Maybe you don't really need to do a worldwide cruise but would be just as happy with a Caribbean cruise instead.
Keep going through your bucket list in order of priority, comparing it with your available income, until you've come up with a plan that works for you. You might also consider raising the priority on some of the less-expensive items on your list. For example, "learn to speak Mandarin" would put a lot less pressure on your income than that cruise. Finally, consider your physical resources and health concerns. A hot-air balloon trip might be a cherished dream, but do you really have the stamina to manage something like that and still enjoy it?
Work out a timeline
Once you've decided which bucket list items you'll be able to manage, it's time to firm up your plans. Arrange the items in the order you want to tackle them, and start doing your homework. If a Caribbean cruise is the first thing you want to hit in retirement, start researching cruise lines, look at prices and schedules, see which activities are included for each cruise, and so on. If you plan to move to Florida, then start looking at cities to decide which one you want to pick, pull up all the information you can find on those areas, and schedule a visit or two to see for yourself what it would be like to live there.
You want to get all of this research done well before your planned retirement date, so that if you uncover something that changes your mind, you have plenty of time to go back to the drawing board. And it's wise to schedule the more strenuous activities for early on in your retirement: as you age, your energy level will likely drop and health issues may appear that would make it more difficult for you to enjoy these activities.
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