Where to Start

Putting together a good retirement plan is a lot easier than putting together anything with the words "assembly required" on the box. It just takes a bit of time and effort on your part.

Your first step in planning for retirement is to set your retirement goals. Setting goals will help focus your retirement strategy and efforts. Setting goals also gives you something to aim for, and prepares you for change.

Financial Calculators In setting your goals, you'll need to know where you are financially before you figure out where you are going. To help you do this, use this Net Worth Calculator to compute your current net worth and to estimate what it might become in the future.

When establishing your goals, consider all the issues that may come up. In order to be thorough, use the method taught to journalists for reporting a story. Ask yourself some basic questions that start with who, what, when, where, why, and how. Here are some initial questions to ask (and answer) yourself:

• When do you want to retire?
• Why do you want to retire at that age?
• Where do you want to live after you retire?
• How much money will you need to have the type of life you want to lead?
• Who will share your retirement with you or otherwise depend on you financially?
• What health issues do you foresee having to deal with?

Tip If you are married, always include your spouse in the decision-making process. Finances are generally a major source of friction in marriages. So, do what you can to avoid unnecessary headaches. In addition to promoting marital harmony, involving your spouse in the process means there are two people, not just one, trying to reach your retirement goals. Also, joint planning helps the younger spouse get used to the idea of possibly having to work while the older spouse retires.

It may seem that retirement planning is akin to predicting the future with a crystal ball. Retirement may appear so far away that you can't possibly decide where you'll want to live or what you'll want to do.

Although many things may be uncertain, it is extremely important for you to at least try to estimate how much income you'll need so that you can start planning for your financial security. As for the uncertainties of life, they are handled by periodic review and adjustment of your retirement plan throughout your entire life.

In a nutshell, the retirement planning process is really very easy. The process involves answering the following three questions:

• What do you need for retirement?
• What do you have for retirement?
• What can you do if you fall short of your goals?

These questions should be answered initially and throughout your life.

Don't worry. We guide you through each step in the process. To help you answer the third question, we also provide some commonly missed tips for you to consider.