One of the most important numbers most people consider when they plan their retirement is also the one that gets them in trouble: their age. The right way to consider age in financial planning is to use it to plan an effective retirement horizon – how many years will you need to fund and how likely are you to need to pay for some form of long term care. The wrong way to consider age is to use it to defend an otherwise random decision to stop working. It is extremely dangerous to base your retirement on the feeling that you are entitled to it. “Listen, I’ve worked hard for 35 years and I’m already five years older than my dad was when he retired,” goes the common though flawed rationale. “I’m done. I’m out. “ Asked what they intend to do when their money runs out (as it probably will), they respond, “I’ll figure that out when it happens.” Well, that won’t work. You can’t take out a loan to fund your retirement, and, as your money runs out you find yourself less and less in control of the life choices you took for granted. To establish the financial freedom you need to enjoy your retirement, you need to be proactive. Here are seven steps you need to take before you decide to retire (and none of them involves your age): Establish a budget. This tedious task yields a key number to consider when planning your retirement – how much money you will need each month. Of course your retirement budget will look a little different than your working budget – for one thing you’ll be withdrawing, not contributing, to a retirement plan. But the best place to start planning is by figuring out your outflow now. Develop disciplined spending habits. Don’t spend money you don’t have. Plan for large expenditures and try to keep debt under control. If… | Read More »