Retirement is a moving target for most working Americans. The average worker retires earlier than age 65 according to The Gallup Poll* — long considered the age of normal retirement and still the specified age of retirement for many employers.
However, it's clear that the baby boomer generation is reshaping the very notion of retirement just as it has reshaped so much about American culture.
Many of today's retirees continue to work part time after leaving the traditional workforce or transition to different careers with plans to postpone "full" retirement until a later date.
Prepare your plan
Whatever your vision of retirement, the most likely way of achieving it is to have a plan. Here are five things to consider as you formulate your plan:
Start general planning for retirement ten years in advance.
Estimate how much you expect to accumulate before retirement; assess your retirement income resources, including Social Security; do a quick calculation of your anticipated expenses, both fixed and variable.
Use these figures to guide your planning to determine whether you can retire when planned.
If your assessment suggests that you may not be able to generate the income you may need from your current investment strategy, consider alternatives:
Find a way to invest more, possibly become more aggressive in your strategy (if you can tolerate the volatility), postpone retirement a few years, incorporate part time work in your plan or consider tapping the equity in your home.
Review your asset allocation.
Depending on where you are relative to your retirement date, make sure it is in line with your risk tolerance, time frame, and your goals.
Make a written plan.
Lay out your vision of retirement in writing—where you'll live, what you'll do with your time and how you expect to pay for it.
Compare your goals to your income resources to determine if and where there are gaps and how you can bring them together.
Update your plan annually.
Once you've made a plan, it's easier to review it once a year to see how you're measuring up. Revise your plan to reflect any change in your financial circumstances.