When it comes to retirement, a dream isnt a plan

Most people dream about how they might spend their retirement days.

For many, this special time of life represents unstructured freedom; they have yearned for, to do as they please, when they no longer have to answer to an employer. So why is it that the vast majority of people wont be financially prepared to live a comfortable and financially predictable life, for the 10 to 35 years, they will be living without earned income?

The answer is lack of proper planning. Most people spend more time planning a vacation than they do planning for their retirement.

Just for fun, let’s do a comparison.

Here are some vacation planning questions: Where are we going? When are we leaving? How will we get there? How long will we stay? Where will we stay? What will we do when we get there? How much is it going to cost? How will we pay for the vacation? Have we actually saved enough money to cover our vacation expenses?

Will our medical insurance cover us during our trip? Who is going to get the mail and water the lawn when we are gone? Who is going to take care of the pets?

But if people planned their vacations in a similar way as they plan for retirement, here’s what it might sound like: OK honey, it’s time for our dream vacation! Pack the bags I’m not sure what we will need since I don’t know exactly where we’re going, bring whatever cash you have and be sure to put all the credit cards in your purse. Let’s get to the airport; we’ll take the first plane we can catch. Once we land, we’ll stay in the best hotel we can find, we’ll rent a luxury car, eat at the best restaurants and we’ll stay until our money runs out. Oh, I hope the dogs will be OK.

Here's the real reason why U.S. health care is so expensive (2:21)

The U.S. is the largest health-care spender in the world, but that doesn't actually translate into better health outcomes for Americans. Dr. Clay Johnston, Dean of the Dell Medical School at The University of Texas at Austin, explains why.

Sounds a little crazy, don’t you think?

The obvious difference between these two approaches is planning. Whether planning for a fabulous vacation or planning for retirement, planning is the common thread. Planning keeps you out of trouble as it reduces your risk of disappointment, discomfort, stress which is born from uncertainty and unnecessary expenses.

To help move you toward creating a viable retirement plan, here are 13 questions to get you started:

What is your target retirement date?

What are your monthly living expenses? Exactly.

Do you have special interests and hobbies? If so, are there costs involved?

What amount of money will you need to set aside to build your cash emergency fund?

What is the amount of Social Security benefit you will be receiving? When will it start?

What is the total amount of all your retirement savings?

Where do you plan on living; are you staying in your home? Will you be downsizing?

Do you currently have special health issues that need consideration?

Do you plan on earning income during your early retirement years doing consulting or pursuing an income generating hobby?

Do you know what required minimum distributions are?

Do you have a will?

Do you know the importance of having a Power of Attorney for medical and financial matters?

Do you realize that your investment risk profile needs to be re-evaluated as a retiree?

Putting off creating your retirement plan as you are socking money away and hoping for the best wont serve you in the long run.

If you start your retirement planning process early and take it step by step, making it a priority project, as if your future life depends on it which it does you just might be living your dream during your retirement years.

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