Though retirement can be an exciting milestone to look forward to, for many older Americans, the thought of leaving the workforce is overwhelmingly stressful. And given the many unknowns of retirement, that sentiment certainly makes sense. Still, that doesn't mean you can't take steps to approach retirement with more confidence and less fear. Here's how.

1. Have a budget mapped out

How much money will you need each year to cover your living expenses in retirement? Without a budget, that's a tough question to answer, so rather than guess -- and stress -- over it, do some research, figure out how much your various bills will likely amount to, and see what it will take for you to live a reasonably comfortable lifestyle.

Smiling older man against blackish-gray background


Remember, there's a good chance some of your current expenses will stay the same or go down in retirement (think commuting and transportation, for starters). On the other hand, some of your expenses are likely to rise in retirement, like healthcare and leisure (since you'll have more free time on your hands). But if you go in with a clearer sense of how much you'll need to spend on a monthly basis, it'll help you better assess your savings and figure out whether the time is right to leave your career behind.

2. Know how much income your savings will actually provide

It's easy enough to access your IRA or 401(k) plan in the months leading up to retirement and see how much money you've accumulated in it. But what sort of lifestyle will that balance actually buy you?

Let's assume you've amassed $500,000 in time for retirement. That might seem like a pretty impressive sum. But when we apply an annual 4% withdrawal rate, which many financial experts recommend, that only leaves you with about $20,000 a year in income. Now you may have other sources of retirement income at your disposal, like Social Security or earnings from a part-time job. The point, however, is to look past the number your account balance is showing and instead understand what it means in practice.

For example, if you map out the budget we talked about above and come to see that you'll need about $3,500 a month, or $42,000 a year, to pay your bills as a senior, then entering retirement with $500,000 will get you about halfway there. From that point, it's a matter of evaluating your other income sources and seeing if they'll make up the difference.

3. Develop a smart Social Security strategy

Even if you've saved nicely for retirement, there's a good chance you'll come to rely on Social Security in some shape or form to pay your bills. And the more thought you put into a filing strategy, the better positioned you'll be to make the most of those benefits and reduce some of your financial stress in the process.

If you wait until your full retirement age to file for Social Security, you'll get the full monthly benefit your earnings record entitles you to. That age is either 66, 67, or somewhere in between, depending on the year you were born.

That said, you're allowed to start claiming benefits as early as age 62 and as late as age 70 (technically, you don't have to file once you turn 70, but there's no financial incentive not to). Filing ahead of full retirement age will give you access to your money sooner, but it'll also result in a reduction in benefits (and, in many cases, a permanent one at that). Waiting past your full retirement age, meanwhile, will cause your benefits to increase, so if you don't need them right away, it's an effective means of boosting your monthly income later on.

There's no right or wrong answer when it comes to deciding when to file for Social Security. The key, however, is to develop a strategy that best serves your financial needs.

Retirement can be a worrisome period of life, but it doesn't have to be. Take these key steps, and with any luck, you'll enter your golden years with a much more confident outlook.