What To Do When Retirement Is Near

Someone in your family might need some help with higher education expenses as well. If so, don't let it creep up on you--be sure to budget for it for the years you expect it to hit.

Automotive expenses (or call it transportation expenses if you don't own a car) are another thing. These expenses might actually drop after retirement since you'll no longer be commuting, but it's important to account for them. Be conservative (that is, make it a bit higher than you think it will be) with this number; the good news here is that if the going gets unexpectedly tough down the road, you should be able to adjust buy buying a cheaper or used vehicle, or by cutting back on travel.

It would be impossible to spell out all potential non-standard expenses here because everyone's plans--and lives--are different. Some like to travel and spend extravagantly on it; some stay home most of the time. Some families like to throw big weddings for their kids; some kids will elope (whether you want them to or not!). The point is to really think through expenses that could materialize down the road, and then include them in your plan. If you don't end up spending on those expenses, great--you just padded your plan a bit.

Tally Up Your Assets

With spending needs (and wants) out of the way, you can move on to your investments: What they're worth now, what they'll be worth going forward, and how much you can safely draw from them.

This part, frankly, gets a little complicated. There are a lot of moving parts. It's best to track and estimate this information using software.

If you are able to provide some basic data, though, a good software package should be able to give you the estimates you need to make some decisions.

The first thing to know is what you have paid for your investments--that is, their cost basis. You don't even need to know it for your traditional IRA, 401(k), or other qualified accounts. But it's important to know it for your taxable accounts and your Roth so that the software program will be able to estimate your anticipated tax burden more accurately.

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