Retirement Tips: Keep Your Lifestyle in Mind When Planning Your Retirement

According to the 2006 Social Security Trustees Report, a 65-year-old man in 2006 should expect to live to 82.1 years and a 65-year-old woman should live to 84.7 years, a testament to the aging of America and the fact that we're living much longer lives. When looking ahead to retirement, planning is perhaps the most important part, as most retirees need around 70 to 80 percent of pre-retirement income to live comfortably.

While there are many things to consider, from investments and reverse mortgages to home equity and Social Security (for the most part, these are all unpredictable factors to a point), there is one retirement factor you can predict ahead of time: your lifestyle. From determining whether you will continue to work part-time to deciding what luxuries you can live without, thinking about your current lifestyle and what your retirement lifestyle will be is an important thing to consider.

Retirement Tip #1: Location is everything. If you want to relocate for your retirement years, do your research ahead of time. Consider cost of living, taxes, climate and work opportunities. If you opt to stay where you are, consider selling your house: a married couple filing joint taxes can profit up to $500,000 from the sale of their house without paying federal taxes on it. You can take advantage of this tax break every two years, at any age.

Retirement Tip #2: Calculate a budget and stick to it. There's really no room for error here; while it might be ok for me to go a little over my monthly budget and cut into my savings, do it when you're retired and you may outlive your money. Downsize as much as possible. Start with your credit cards and eliminate those little daily luxuries, like a $6 French vanilla cappuccino with whipped cream at the corner Starbucks. Make one weekly trip to the ATM to withdraw funds; once that money is gone, don't go over that weekly budget. Also, leave some room in your budget for unexpected health expenses or extra spending. With a lot more leisure time on your hands, you may be inclined to shop a little more.

Retirement Tip #3: Decide when to retire. Retirement age is no longer 65; it's gradually moving up to 67, according to the AARP. Still, others decide to retire at 62 or younger. Deciding when to retire is often a question of how much you need to retire and how long your retirement will last (don't forget to estimate inflation). For example, if Social Security benefits will make up a good chunk of your retirement income because you don't have a pension, waiting a little longer to retire will benefit you in the long run. Someone who retires at 62 will receive only 80 percent of what they're entitled to under Social Security. And while it's hard to estimate you long you're going to live, you can reasonably estimate based on family history and your current health and lifestyle.

There is a lot more than this to consider about retirement, but these tips should provide a good way to get you started thinking about your future away from the daily 9-5 grind.