There is a lot to consider as you prepare for retirement, so it's wise to begin planning well ahead of time.
Set your target date
Before making any plan, it’s important to have a clear end goal in mind. Setting a target retirement date will help you create a timeline and guideposts against which you can measure your progress. This doesn’t mean that the date is set in stone, however. In fact, many people prefer a “phased retirement,” which allows you to transition from full-time work to reduced hours. Before considering a phased approach, talk to your employer about how reduced hours will affect your pension, health insurance, and other employee benefits.
Envision your retirement
In order to determine when you can afford to retire, you need to consider what you want to do in retirement. When envisioning your retirement lifestyle, be as realistic as possible. What interests do you want to explore that you may not have had time for while you were working? What additional expenses might you incur? Do you want to start a business, travel, relocate, or help fund your grandchildren’s education? A clear retirement vision will help your financial advisor understand where your accounts should be as you move through your pre- and post-retirement years.
Calculate your number
Once you know when you want to retire and what your life will look like, you can better estimate the amount of retirement savings you’ll need to support your lifestyle. When calculating your number, it’s also important to consider the financial risks you may face in retirement.