Retirement is a major milestone in your life, and it should be a time you look forward to. But around half of all Americans aren't looking forward to leaving the workforce forever -- and money is a big reason why.

Mature senior couple toasting

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Even if you've squirreled away enough cash so that you don't have to worry about paying the bills without a paycheck, you'll still need to adjust to managing your financial life under very different circumstances than when an employer was giving you money each month. You want to be prepared for the financial changes retirement can bring so you'll have peace of mind and money in the bank. These four steps can help you to get ready to retire in style. 

1. Calculate your income during retirement

Before you can even think about retiring, you must determine how much money you can generate without a paycheck. This means adding up all of sources of income you'll be able to access once you stop working.  

For retirees, sources of income typically include Social Security benefits, withdrawals from a 401(k) and IRA, and an employer-provided pension. If you have investment real estate that generates cash, are receiving alimony that will continue into retirement, or have access to other steady streams of cash you can count on, factor these sources of funds into your calculations, as well. 

To find out what your pension income will be if your employer provides a pension, talk with human resources. You can find out about Social Security income by visiting my Social Security, signing into or creating an account, and viewing the details about income available to you at different retirement ages. If you have a 401(k) or IRA, check the account balances and use a retirement income calculator to determine how much you can safely withdraw each year without being at risk of running out of money. 

When you've added all the numbers up, you'll know exactly what your annual household income will be during retirement. Then you can decide if you're actually ready to give up working.

2. Create a new budget to live on

Many people believe they'll spend less during retirement than when they're working, but this isn't necessarily a given if you're going to be traveling a lot, or indulging in expensive hobbies. The best way to get a handle on what you'll spend during your retirement is to create a budget for yourself. 

You should know your estimated retirement income from Step 1, so give each of those dollars a job. Create a budget that accounts for food, housing, medical expenses, travel, costs of fun activities with the grandkids, and anything else you want to spend money on. Make sure the numbers add up and that you can afford your desired retirement lifestyle with the income you'll have available. If your budgeting exercise shows you aren't going to have enough to cover all your costs, you'll either need to scale down your expectations, or scale up your savings before you retire. 

Once you've created your budget, practice living on it if it's less than what you're currently making. Don't assume your food costs will go down just because you're at home to cook more, or that you won't be spending as much on entertainment. Instead, give your new budget a try, and see if you can actually keep your expenses within your target levels. If you can't, this is a big red flag that you need to revise your retirement plans. 

3. Allocate your investments appropriately

Since you'll be drawing on your investments soon to produce income you need to live on, you're at far greater risk if you suffer significant losses. You won't have the luxury of time to make up for losses, and you may need to sell when investments are down because you need the money to pay for living expenses. All this means you can't afford to take as many risks to chase higher returns, and you'll need to rebalance your portfolio to adjust for your newly risk-adverse status.

But you also don't want to be too conservative, because then you take the risk of your money running out. You shouldn't dump all of your stocks just because you're nearing retirement age, but you don't want to just leave your investment allocation the same as it was when you were working. Consider the amount of risk you can accept based on your life expectancy and the size of your nest egg. You may want to keep somewhere around 50% of your investments in stocks, and then consider slowly scaling down as you get older. 

4. Make a plan for medical costs

Don't assume Medicare has you covered for all of your healthcare needs. It doesn't. There's a long list of things Medicare does not cover, and retirement healthcare costs are rising twice as fast as Social Security. You'll need to make a plan to pay for care you need, which means researching Medigap plans -- which supplement traditional Medicare -- and comparing these costs to Medicare Advantage plans to find out what you'll pay for coverage, and how comprehensive that coverage will be. 

You should also shop for long-term care insurance, which would cover a nursing home if you need one, and should consider opening and investing in a health savings account (HSA) if you don't already have one. An HSA allows you to invest with pre-tax funds and pay qualifying healthcare expenditures without paying taxes on the investments. Investing in an HSA, if you're eligible based on having a high-deductible health plan, can help you better afford healthcare expenses. With some estimates suggesting senior couples could could require as much as $350,000 to pay for the costs of healthcare during retirement, you must make sure your retirement budget has room to cover care costs. 

By calculating your total income, creating a budget that factors in healthcare costs, and taking steps to protect your investments, you can look forward to retirement because you'll know you have plans to afford a good life during your golden years.