You know the old saying about failing to plan means you're planning to fail. The same goes for retirement. If you don't make a plan, you may never get to retire. And if you don't have a vision of what your retirement years will look like, you'll likely drift through your senior years ... and then wonder where they went.
Remember, a plan is just a projection. It does not have to be complicated or particularly thorough. It does not have to be written in stone, though it should be written down somewhere. It can change. You can adjust it, adapt it to different circumstances or to new ideas you develop as time goes on. But if you have a plan, you at least know where to start and how to make adjustments to meet your new needs as retirement marches on.
Here are five simple steps to formulate a retirement plan -- and they work whether you're 55 or 75.
1. Think about what you want the rest of your life to look like. Are you playing golf or lazing around on the beach? Are you volunteering for your favorite cause or babysitting your grandchildren? Are you pursuing a long-held dream to start a business or pursue an interest in photography or crafts or lifelong learning? Of course, you can always do more than one thing, especially of you're young and active and in good health, but no matter your circumstances, what you want to do in large part determines where you want to live, what your relationships are and how you spend your time. Just like a good paint job begins with preparation, a good retirement begins with your clear-eyed vision of what makes you happy.
2. Where will you live? Most retirees retire in place, meaning they stay in their old family homes or move to smaller quarters in a nearby neighborhood. But if you dream of sand and surf or of starting a new life with your distant grandchildren, now is the time to make your move. If you live in an area with a high cost of living, in California or New York for example, you may want to research states with lower taxes and lower overall expenses. If you dream of traveling in retirement, you may not need to keep your expensive old home and would be better off living in a condo, possibly within a half-hour drive of a major airport.
3. How will you develop your retirement interests? If you already have a hobby that you want to pursue with more intensity in retirement, all you have to do is focus the extra time and energy you now have to your chosen field. But there are copious opportunities to find new interests or develop new skills. Many communities have senior centers that offer classes in photography, art, language and history. They also offer activities ranging from ping pong to pickleball to pinochle. Several national organizations, such as the Center for Learning in Retirement, the Collegium for Lifelong Learning and the Osher Lifelong Learning Institute, offer a wide array of courses, often through your local university. For the most part, these programs require no entrance exams, no tests and no grades. They exist to help you explore new fields and develop new skills.
4. How will you finance retirement? It's never too soon to start saving for retirement, but it's never too late to assess and organize your resources and set up a solid foundation for your financial future. Figure out what your assets are, including any big-ticket items you may want to sell in the near future (a vacation home, a boat or that extra car you may no longer need). Identify where your income will come from -- including Social Security, a pension if you have one, IRA or 401(k) withdrawals and any other source of monthly income. Don't forget to account for taxes. And beware the biggest drains on your retirement money: spending too much on a big house, giving too much money to your kids and getting carried away on the carpet ride of travel.
5. Write it down. A goal without a deadline is just a pipe dream. A plan that exists only in your head is just wishful thinking. Write your retirement plan down on paper or in a computer file. Be as specific as you can, but also give yourself alternatives and deadlines. If you want to go fishing, are you going to need a boat? Move to be near the water? Outfit yourself with the proper supplies? Who are you going to go fishing with? You may not have all the answers, but once you've written down a plan, you know where to start, you can do some research and talk to your family and friends, and you can actually achieve what you want to accomplish.
Tom Sightings is the author of "You Only Retire Once" and blogs at Sightings at 60.