5 Biggest Retirement Questions Answered

We each have our retirement dreams. But, let’s face it, most of us have retirement worries, too. From "Will I have enough money to retire?" to "What if my kids and parents also need me to support them?" Here are five common retirement fears and what you can do about them.

“I tell my clients, it’s hard to answer that if you don’t know your starting point,” says Mark La Spisa, a Certified Financial Planner (CFP) in South Barrington, Illinois. He recommends three steps: Inventory the financial resources you’ll have to support you in retirement: pension, 401(k), investments, Social Security, part-time employment, and so on. Next, determine what it takes to support your present standard of living by tracking all your current spending. Then estimate what you’ll need to live on after you retire. Using online retirement calculators can help you get a fix on these various numbers.

You’ve figured out what you’ll need to sustain your current lifestyle after you retire. Now look at the portion of that amount that goes toward your needs or basic expenses, such as housing, utilities, and food.

“Make sure your basic expenses are as low as possible and that they’re covered by fixed income, such as your pension and Social Security,” advises Rita Cheng, a CFP in Bethesda, Maryland.

Then there are what Cheng calls “lifestyle expenses”—those non-basic items such as a kitchen makeover, a new iPad, or that long-dreamed-of trip to Hawaii. To cover these, rely on additional financial resources, such as investment income or part-time work, Cheng advises.

Memories of significant double-digit losses a few years ago still make us nervous about investing. But having a diverse investment mix remains critical, even as you get close to or enter retirement. “You need growth,” Cheng says, “and also stability.” You don’t want to be too conservative or too risky. A financial planner can work with you to make sure you have the right asset allocation to match your circumstances. Find a certified financial planner at the CFP web site.

You can’t know how long you’ll stay healthy and independent. What levels of care might you need? “This is where proper estate planning comes into play,” La Spisa says. “You can take steps now to protect your assets later.” For instance, setting up a special trust or buying long-term care insurance might be a solution. An estate planning specialist can advise which strategies are right for you.

You can’t predict this either. But the bigger the savings cushion you create before retirement, the better you’ll be able to deal with whatever life brings you. “If you plan for contingencies,” Cheng says, “you’re being proactive, not just reactive.”

Behind all the above worries may be the concern that you’re starting your retirement planning too late. Take heart. If you’re in your 50s, you’re probably in your highest earning years. “You can make up for a lot of procrastination,” La Spisa says. “In football terms, age 50 to 55 is your red zone. You have the potential to make a touchdown.”

Already past 55? Anything you do now—no matter how big or little—will help make for a brighter retirement. And help you sleep easier tonight.