Part of your life? Make it part of your plan.

The first step in creating a plan is knowing how

Creating a successful retirement plan sounds difficult. But it really isn't.
All you have to do is follow these steps.

Identify what you currently spend money on - and how much.
By knowing what your expenses are today, you'll get an idea of what they might be in the future. And if there are any places you can cut costs to help you reach your goals.

Estimate what future expenses might be.
It's hard to be exact with future expenses, but you can at least get a ballpark idea of what you'll spend in a month. Usually, it's less than you're spending now. Especially, if you currently commute long distances, or will pay off your mortgage before retirement.

Evaluate existing retirement income sources.
You may qualify for Social Security. You might also have an employer-sponsored retirement program, like a 401(k). Maybe even a pension. Estimate all the likely income, compare it to your estimated expenses and see where you come out.

AARP Financial Inc. does not provide tax advice. Please consult a tax advisor for information pertaining to your particular situation.

Check your progress to stay on track

Times change. Circumstances change. The markets change. So you need to revisit your plan and progress periodically to see if you need to make a change. Ask yourself these four questions at least once a year:

Have I left a job and not taken my 401(k) along?
If so, you may be reducing your returns with unnecessary extra maintenance fees.

Consider all the different options available to rollover your 401(k) account from a previous employer.

Am I sacrificing tax-deductible investment contributions?
The government changes investing limits periodically to keep up with inflation. Don't assume that just because you weren't eligible for a tax deduction on IRA contributions in the past, you still aren't.

Am I duplicating investments?
If you have more than one investment account and don't think about all of them as a whole, you could be investing in the same investments in more than one account — and increasing your risk without even realizing it.

Do I have the right investments?
At different points in your life, you need different types of investments. For example, more than five years away from retirement you may want to invest more aggressively than when you're close to, or in, retirement.

When and how to withdraw the money you worked hard to earn

Amassing enough money to live on in retirement is not the end of retirement planning. Ensuring it lasts throughout your projected lifetime without unnecessary taxes and penalties is. Withdraw too soon — or too late — and you may pay tax penalties. Here's the overview on timing: