Planning for retirement: Making the numbers work

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(MoneyWatch) Welcome back to my final post in my series "16 Weeks to Plan Your Retirement." In this series, you've completed a lot of good work. You have:

  • Thought about the life you want in retirement
  • Estimated your life expectancy, and that of your spouse or partner, if applicable
  • Investigated the professional help you might need
  • Adopted steps to improve your health
  • Taken inventory of your financial and nonfinancial resources
  • Explored how you might continue working in your retirement years
  • Learned how much you might receive from Social Security, and how to optimize this valuable benefit
  • Estimated how much income you might receive from your retirement savings, and a pension, if applicable
  • Learned about investing strategies that might be appropriate for you in retirement
  • Taken inventory of your living expenses -- and how they might change in retirement, including housing, medical and long-term care expenses
  • Learned how to protect yourself from potentially ruinous bills for medical and long-term care
  • Put it all together by comparing your total retirement income to your living expenses

If you're married or have a life partner, hopefully you've included that person in your planning, as they're along for the ride with you!

It's often the case that when you first go through all these steps to estimate your retirement income and expenses, you discover your income won't quite cover your projected expenses. In this case, you'll need to make some adjustments and do the math again. Here are some common strategies. While easier said than done, these are nevertheless the big steps you can take and the most important things you can control to make the numbers work:

  • Retire later
  • Save more between now and when you retire
  • Work part time in retirement
  • Fine-tune your living expenses
  • Share housing to dramatically reduce your living expenses
  • Move to a cheaper area of the country.
  • Use a different method of generating retirement income from your retirement savings

This exercise can cause you to revisit your life goals -- the "who, what, when, where, why" of your retirement, as discussed in week two of this series. This is OK -- retirement planning usually involves making a series of tradeoffs so that you have the financial resources to support the life you want.

Stay tuned for my post next week that contains links to all the posts in the 16-week series and serves as a table of contents that makes it easy for you to reread all the posts.

If you've followed along for the entire series, you've done a lot of work. But it's well worth the effort -- the people who do best in retirement are those who planned for it. Remember, you're planning for a period of your life that can last 20, 30, even 40 years. It's inevitable that it will take a lot of time to come up with a plan that works for you.

Good luck!

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.