So you have some money in your 401(k) and you are concerned about how long it will last once you retire. It’s an important question for sure and one that you should ask. But that is just one of several questions that need to be addressed as you start on the path to a successful retirement.

What exactly does that term mean; a successful retirement? Well, that is the one that you envision for yourself. It’s not one that some advertisement on TV suggested i.e. that you should own a vineyard once you retire. Unless, of course, a vineyard is what you envision and you have the means to get there.

Here’s my definition of success in retirement planning. It’s the day-to-day realization of your retirement goals. That’s right it’s a journey, not a destination. Education and planning are the keys to a successful journey.

To help you on your way here are 6 questions that you will need to come to terms with sooner or later. I suggest that you think about these sooner so you can plan and not be in crisis mode down the road.

1. Can I continue my current standard of living into my retirement years? The answer to this takes some real introspection. It’s not, “do I want to?” but “can I?”. You will need to do some number crunching and put a current budget together for starters. Check out this budgeting tool if you don’t have one of your own.
2. When can I retire without running out of money? In order to do this accurately you should work with a CFP®. He or she will use a financial planning tool to analyze your current and future assets along with any pensions you might have as well as Social Security to project how long your money will last. I use a terrific tool, Retirement Analyzer, to come up with the answer to this question. In any event you have to know the answer to this question. This is not a time to guess.
3. How could my situation change during turbulent economic times? The great economic meltdown of 2008 taught us a lot about contingency planning. Among other things it taught us (although this is no secret) that the stock market doesn’t always go up. Yes, we have to plan for worst case scenarios and many possibilities in between. A good planer will help you do some contingency planning and the help you “put a stake in the ground” and make a decision as to where to start; what rates of return will you use pre and post retirement. What adjustments will you make base on various scenarios for example.
4. How would it affect my family if I die prematurely? When we are young we think we are invincible. Life insurance seems like a waste of money. As we age life happens as they say. We hear of tragic deaths and illness as well as horror stories of people who died without life insurance. 30% of US households have no life insurance. If you don’t like the answer to this question talk to your financial planner about life insurance.
5. How would it affect my family if I enter a nursing facility? This question brings up a couple of issues. Do you have sufficient disability insurance? Yes, it is more common than you think for “younger” people to have to go to a nursing facility. Think stroke, Parkinson’s disease or some other malady that can strike at any age. Long-term care insurance is not just for the elderly although most people don’t buy it until they are in their 50’s when of course it costs more and can be more difficult to qualify. As with question #4 if you don’t like the answer then talk to a pro about disability and long-term care insurance.
6. What are the possible solutions if my situation changes? OK, this is where we get down to the proverbial “brass tacks”. We call these the “Red Line Solutions”. The red line represents the point where you run out of money in retirement. We try to push that red line out beyond age 100 to be safe. But what if your red line is at age 75 or 80. Will you gamble that you won’t live beyond that or will you consider some possible solutions? Here are 5 examples of those solutions:
   1. Work longer – retire later
   2. Work a second job or part-time after retirement
   3. Reduce your monthly expenses
   4. Increase your contributions to your retirement accounts
   5. Sell an asset – maybe a vacation property or the family boat

There is no right or wrong answer to each of these 6 questions. Actually there is a right answer and that is the one that you come up with. Yes, these are personal questions and the answers should be shared with your life partner and your Financial Planner partner. Now is the time to find a financial solutions partner and start collaborating on your plan for a successful retirement. Remember, it’s a journey not a destination. Plan well and live better!

Time Out! : Which question concerns you the most? You can leave a comment here.