When can I retire? This has literally become that million dollar question that many will ask themselves at one 6me or another. Like any financial goal, the key to successful retirement is thoughtful planning and preparation. After all, no one wants to have to retire twice. I have heard so many horror stories about individuals who failed to appropriately plan for retirement. Within two to five years, these individuals find themselves back in the workforce. What a travesty.

The first thing an individual wants to do when contemplating retirement is to assess how much money will be needed to finance their retirement years. As a rule of thumb, an individual will typically need to replace 70 to 80 percent of their annual pre-retirement income. If an individual earns $100,000 per year, he needs approximately $80,000 per year during retirement to maintain a comparable lifestyle.

The typical age at retirement ranges from 55 to 62. The average life expectancy is 79 years. That means an individual retiring at age 59 will need at least 20 years of living expenses accumulated at the age of retirement, maybe more. This can be daunting for anyone when considering over 40 million American households have absolutely nothing saved for retirement. Do not fret. There is still hope for a successful retirement. It is never too late to plan.

The best way to retire is to be totally debt-free, this includes your mortgage. If you plan to retire within the next five to 10 years, maximize your retirement savings by contributing the maximum amount allowable by the Internal Revenue Service. Next, you want to tackle all of your debt. Implement an aggressive debt extinguishment campaign that will, at a minimum, allow you to burn your mortgage and retire a student loan debt. By the time you retire, you should have nine to 12 times your annual income in retirement savings.

Consider the cost of healthcare during your retirement years and your total living expenses. Medicare will not cover all of your medical expenses. Be realistic when estimating your annual living expenses and your projections for healthcare coverage. You may also want to consider obtaining long term care insurance. Considering inflation, living expenses may actually increase during retirement years.

In addition to your living and healthcare expenses, take into account the cost of hobbies during retirement. Playing golf and traveling the world can become expensive. So be prepared to instead volunteer your time for causes you champion.

Also, during your retirement years, you have to consider that you will be more susceptible to market declines and downward market trends. Be prepared to review your retirement portfolio on a quarterly and/or annual basis. Consider engaging the services of a professional financial advisor or a certified financial planner so that you can protect the nest egg that you have accumulated.

You should also consider the tax implications of your retirement. A portion or all of your social security benefits may be taxable but its dependent upon your income. Annual distributions from your retirement plan will also be taxable. Consider enlisting the services of a certified public accountant to assist you with effective tax planning.

Lastly, plan to enjoy your retirement. These will be your golden years. Know that you have paid your dues. Sit back, relax, enjoy and let your dues pay you.