What Should I Consider for an Ideal Retirement?

"Ideal retirement" is defined differently for everyone. In my case, I envision a retirement in which I have sufficient means to write what I want, when I want, while reserving time for my family. I don't need a mansion or millions of dollars, or a vacation home in Puerto Vallarta. This means my retirement plan is different from someone who does desire those things.

When planning for your ideal retirement, it is important to consider your goals, both for retirement and for your career until then. Know what you want your life to look like once you've reached that point, then word toward that vision with investments, savings, and career advancement.

How will you fund your retirement?

Do you have a 401(k) through your employer? A Roth IRA? Other long-term investments? Your ideal retirement can only become a reality if you are able to finance the things you want to do. This means saving your money as early as possible.

Create a diverse portfolio of investments that is commensurate with your risk tolerance. High-risk investments are common for younger professionals who are willing to gamble with their savings, but the ideal retirement savings plan includes a healthy mixture of medium- and low-risk investments.

According to the U.S. Department of Labor, spreading out your money among several different types of investments is the best way to create a secure financial future. Your ideal retirement is only possible if you have enough money in savings to afford it.

Where will you live?

Real estate is perhaps the most expensive investment you will ever make. Do you plan on staying in your house upon retirement, or would you rather move to your dream destination? When you purchase a home, consider how it will fair in the years to come. Is the area stable? Are the home prices increasing in value over time? Are the mortgage payments low enough to facilitate savings?

Start making smart real estate decisions now. That way, if you decide to sell your home in favor of moving elsewhere, you will have enough equity in your home to make that move easy. If you get stuck in a house that continues to depreciate, you'll lose money that could have bolstered your bank account in retirement.

How will you spend your money?

You need to answer two variations of this question when planning your ideal retirement. First, how will you spend your money until you retire? And second, how will you spend your money upon retirement?

It is common for younger professionals to spend without forethought, largely because they believe they have all the time in the world to save. It is important to adopt a different mindset, one of conscious saving, so you know your future is secure.

Simply keeping track of incoming and outgoing funds will give you a comprehensive picture of your spending habits. Once you have that information, you can make adjustments as necessary.

If your ideal retirement includes sufficient money to travel, make entertainment purchases, and spend money in other ways, you'll need to factor that in with your investment strategy and current spending habits.

Are you using every resource available?

Are you contributing the maximum to your 401(k) and IRA? Are you taking advantage of employer-matching contributions? Have you considered money market accounts, CDs, and other financial tools to help you sock away cash?

Even opening a standard savings account is a great first step, but make sure you've chosen the financial institution that offers the highest rate of return in your area. Don't go with whatever savings account is easiest at the branch where you keep your checking account. Do your research.

And finally, the best way to work toward your ideal retirement is to seek advice from experts. Don't rely exclusively on Internet research or trips from your friends and family. Work with a professional for whom finance is a career choice, and follow his or her advice based on your specific situation.

Remember: Retirement investment advice is not created equal. Your unique finances require a specialized course of action. What works for Mom and Dad, or your best friend, won't necessarily work for you.