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Well over half of Americans now in their 40s are at risk of experiencing a decline in their standard of living after they retire, according to the Center for Retirement Research at Boston College. But adopting the right retirement planning strategies at this phase of your life will help you avoid financial disaster in your golden years.

Here are three retirement strategies to deploy before blowing out your 50 birthday candles.

1. Price out a year of retirement expenses

It may sound obvious, but you have to start by figuring out how much it'll cost you to live in retirement. And to do that, you'll first need to define what you want your retirement to look like. Does your definition of happiness involve spending a large amount of time reading books on your porch? Traveling extensively? Volunteering? Or working part-time?

Then there are the more mundane financial items to consider. For example, will you have your mortgage paid off? How much will you require for living expenses and utilities? How much will you budget for health care costs and leisure?

How you answer these questions will define what income needs you'll have in retirement. But don't feel overwhelmed.

You can use Vanguard's retirement expenses worksheet to come up with a concrete number for how much money you'll be spending each year in retirement.

2. Figure out if you're saving enough

To know if you'll have a shot at being able to cover your retirement expenses, you need to calculate your retirement income. How much money will you receive from Social Security, pensions, and other sources of income? Do you intend to work part-time? How much income can you expect to receive from your 401(k)s and IRAs? Total up your anticipated income. Naturally, there are levels of uncertainty involved in any calculation made decades in advance, but it is possible to get a reasonably good idea of where you stand.

For help, take a look at Vanguard's retirement income worksheet.

Next, the moment of truth -- it's time to see how close you are to your dream retirement with your current savings plan.
Check out Fidelity's Retirement Quick Check tool, which can project how much money you'll need, compare it to what you're on track to have, and identify changes you can make to address any shortfall. The tool also factors in inflation assumptions, so that you don't have that figure that out.

3. If you're coming up short, strategically redirect your dollars

If the gap between your expected sources of income and your future needs is sizable, the first thing you need to do is reassess your current spending, find places to cut, and redirect every dollar you can into your retirement accounts.

To help further close the gap, you have options. You can work longer and delay retirement by a few years. Consider downsizing your future plans -- for example, you can decide you'll do less travelin in retirement. If you're looking for ways to significantly decrease your pre-retirement expenses, you could sell your existing house and move into something smaller, especially if you become an empty nester.

In your 50s, you've got to make saving for retirement your No. 1 priority by putting your needs ahead of others'. It's a hard truth to face, but remember that there are alternatives for your dependents (e.g., loans for funding a child's college expenses). Retirement savings is all on you.

If you haven't already done so, consider seeking guidance from a financial planner who can provide you with recommendations that are more customized to your particular situation.

Don't wait another day

Retirement is getting closer each day. So make the most of the years you have left to save. By estimating your retirement expenses, identifying your shortfalls, and taking steps to redirect your dollars toward retirement savings, you'll reap the glorious reward of a truly golden retirement.

Motley Fool contributor Nicole Seghetti writes about personal finance, retirement, and investing. Follow her on Twitter @NicoleSeghetti.


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December 04 2013 at 12:58 AM Report abuse rate up rate down Reply
IBruzEZ

Max out your retirement 401k then live on what's left to bring home. I see so many people pushing their standard of living to the max and leaving nothing for savings...the savings come FIRST, then the little goodies.

August 29 2013 at 9:58 AM Report abuse rate up rate down Reply
ltctree

One big mistake people make when planning for retirement is failing to account for medical costs. Although many people with little to no assets will qualify for Medicaid, if you have any sort of assets to protect, preparing for the high cost of health care is not something to be overlooked.

The majority of long term care claims, about 85%, last less than 5 years. A basic 5 year long term care insurance policy provides a way to hedge against the majority of the risk and still keep your premiums down. The increasing cost of long term care can quickly deplete your nest egg if you haven't planned properly. Be sure to work with an independent agent who works with multiple companies. Compare the top companies at http://www.ltctree.com



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August 28 2013 at 4:28 PM Report abuse rate up rate down Reply
j79xjames

The best way to prepare for retirement is to start early and be consistent. Save withe very paycheck and take advantage of any employer matching plan. And don't take any unnecessary risks with your retirement money. Start in your 20s and you should be OK when you reach retirement age even with the markets roller coaster ride. Also use available information to educate yourself about retirement. I never understand why more people don't use information about retirement that is available on the web. Most of it is free. I have been using the site Retirement And Good Living that provides great information about a variety of retirement topics including finances, health, retirement locations, part time jobs and more.

August 28 2013 at 6:56 AM Report abuse rate up rate down Reply