02/05/2013 02:06 EST

Retirement Advice: 5 Things To Keep In Mind Before You Stop Working


To achieve your retirement goals and truly make your dreams come true on your own terms it takes two very crucial things: financial planning and lifestyle planning. They are equally important halves of a complete whole that will lead to you retiring on your terms and at the age you desire. In other words, retire on time, with the "time" being up to you. By taking the five steps we outline below, you’ll be well on your way to making your retirement dreams a reality.

Five Steps Towards Your Dream Retirement. Slideshow text follows for mobile readers.

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Start Dreaming

All too often, people start planning for their retirement without actually knowing what it is they are planning for. Before you start, outline in your mind what you would like to do with your retirement. Maybe you want to give back somehow, by volunteering at your local food bank? Perhaps you’d rather see the world on a cruise, or take a long resort vacation? Maybe you'd like a vacation home where you can spend your winter months? Really, the choice is yours and don't let anyone tell you that you have to pick just one of these endless possibilities. Remember though, your choices will be the driving force of the financial circumstances you will need in order to meet those chosen goals.

Where's the Money Coming From?

During retirement, your income will likely come from the following three sources: pensions, employment-related sources and your investments. Your retirement will go smoother if your income sources are structured to fit the lifestyle that you want to have during those years. It's also important to ensure that the assets you've built up pre-retirement are still adequately protected.

Is Your Retirement Dream Realistic?

This step is very important because making this comparison will help you determine where your financial surpluses and shortfalls exist. It will also help clarify whether you'll need to supplement your retirement income by working part-time or cut some expenses in order to fulfill the retirement lifestyle that you set out for yourself.

Review and Choose an Investment Strategy

Here's where you choose the various retirement income strategies that you'll be investing in to fund your lifestyle. Whether it be the alphabet soup of RRSPs, TFSAs and the CPP, or mutual funds, stocks and bonds instead, it's best to sit down with an investment advisor and decide which retirement income strategy fits with your goals most closely.

Develop an Action Plan

Your financial advisor will help you come up with an investment portfolio that will allow you to reach your financial goal at the targeted age you wish to retire at. A solid action plan will keep you motivated and continuing to invest as you watch your nest egg grow.