CRUNCHING THE NUMBERS:  Crunch some numbers ... do a 'reality check' ... and see the impact of a housing change

To know what your retirement picture is today -- not the overblown one that plagues you late at night, but the one based on real numbers -- we've provided some basic steps and links to calculators below.  Remember that if you want to reach financial freedom and an enjoyable retirement (however you define it), you need to know where you're starting from.  Only then can you turn things around and move forward. 

Maybe you've done some of these calculations recently for a financial planner ... and that's why you are looking for a 'Plan B'!  If so, then you've already done half the work!

Reality Check:  Your Real Monthly Budget

Obviously you want to start with as realistic a picture as possible of your present financial situation, as painful as that might be.  Here are the steps I suggest you take:

I suggest you look to online sources for budget calculators.  I've found one I really like, prepared by that great website About.com, which can be found by clicking on the blue link marked "budget calculators". 

Generating Your Existing Retirement Picture

Here's the minimum information you're going to want to gather (updated of course), if your circumstances have allowed you to contribute to them: 

If you haven't received a report from the Social Security Administration recently on what you can expect as benefits upon retirement at different ages, that report can be obtained by requesting it through this Social Security retirement benefits link.

So now for the real reality check:  figuring out how bright your retirement picture looks.  So many retirement calculators are available to you; just go to Google and enter "retirement calculator" in the search field.  But of all those I looked at, the one that seemed to give a pretty good picture, relatively painlessly, was prepared by CNN Money, and is available by clicking on the blue "CNN Money" link.  Thank you, CNN Money!

Painting a Brand New Retirement Picture

The section MAKING WISE HOUSING CHOICES presents several options that allow you to lower your housing costs.  Some provide real cost data; others will require that you dig down and follow the links provided so you can estimate what your particular preference would cost.

Since you did the calculations of your existing retirement picture earlier, it'll be easy for you to use the exact same methods to paint a brand new retirement picture using a new housing choice.  Or two.  Or three.

Pre-retirement changes:  If you decide to make a change in housing before retirement, it'll have a major impact on your monthly expenses right away.  That will allow you to start saving so much more towards retirement.  Add to that any amount left over from the equity in your house, if your decision involved selling it.  [That is:  selling price, minus outstanding mortgage and selling expenses, minus lower purchase price of new housing, minus any rehabbing cost.]  Whatever that is, it becomes part of your savings that should be well invested so it's growing and benefiting from compounding every day.

Post-retirement changes:  Even if you decide you're only going to make a housing change upon retirement, it will still have an impact on what you'll need in order to cover your monthly expenses from that time forward.  [It may turn out to be the only change you need to plan on, in order to make your present numbers work.]  And, again, if your decision involves selling your house and reducing your living costs, you'll add to your retirement savings whatever net proceeds you get from selling your house.   [That is:  selling price, minus outstanding mortgage and selling expenses, minus lower purchase price of new housing, minus any rehabbing cost.]

Whatever you decide, my goal is to show you how critical your housing choice is to your retirement picture.  Something very few people take into consideration.

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