1. Assess your personal savings

retirement savings unrealistic

Hopefully, you spent much of your working years socking away money in an IRA or 401(k). If you're thinking of retiring, now's the time to assess your balance and see what it actually means in terms of usable day-to-day cash.

It's easy enough to look at, say, a $500,000 IRA balance and think, "Wow, that's a lot of money." But if we apply a 4% yearly withdrawal rate, which has long been the standard, that $500,000 translates into just $20,000 of annual income, give or take some adjustments for inflation.

Of course, that figure doesn't account for other income sources you might have at your disposal, like rental income or earnings from a part-time job. It also doesn't factor in Social Security. The point, however, is to look past the figure you see on your retirement plan statement and determine how much income it'll actually give you in practice.

First published December 6, 2018: 4:07 PM ET

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