Rehearse for Retirement
When we say rehearsing for retirement, we don't mean go out and star in your own theatrical production. Instead, rehearsing for retirement means coming up with a sound fiscal plan to determine how much you will need to live the life you want when retirement comes.
The first thing you want to do is set up a realistic retirement date. Most people would love to retire much younger than the official Social Security earlretirement age of 62, which is the earliest you can retire and draw benefits. Be practical. You might have to postpone your retirement a few years depending on the type of lifestyle you envision [source: Malvern401k].
Next, figure out how much you need to save and then adjust that amount for inflation [source: Malvern401k]. What do you want your life to be like after you stop working? Are you going to travel? Where are you going to live? Do you want your standard of living to increase or stay the same? Some experts say if you plan to retire at 62 you will need at least 10 times your current income [source: Malvern401k]. For example, if you currently make $100,000 a year, then you would need at least $1 million to live on during retirement.
The bottom line is to do your homework. If you plan to buy an RV to travel the nation's byways, rent one for a week or two and go on the road. This will give you a good idea of how much money you will need to live that lifestyle. If you want to move to Sun City, Ariz. or some other retirement community, check out the housing prices. Talk to other retirees who live there. Since your retirement income will be considerably less than your current earnings, try living on a reduces income for a couple of months. How much can you live on comfortably?