Carrie Schwab Pomerantz
(SET ITAL) Dear Readers: There was a bit of good news recently from the Employee Benefit Research Institute. According to its study of "retirement readiness," released Feb. 13, 2014, baby boomers and Gen Xers have shown some progress toward having adequate retirement income, largely because of gains in the financial markets and home values.

However, it's important to note that this readiness hinges on two essentials -- participating in an employer-sponsored retirement plan, like a 401(k), and smart planning both before and at retirement.

This brings me to one of my personal causes -- helping people prepare for retirement with their eyes wide open. After all, if you don't take control of your money, no one else will do it for you. So whether retirement is far in the distance or right around the corner, here are some thoughts to help you do just that. (END ITAL)

You've probably heard that it's never too early to start planning for retirement. And while that's true, the closer you get, the more crucial it becomes. A study (See Note) by Annamaria Lusardi and Olivia Mitchell showed that people who seriously plan for retirement have over a third more in accumulated wealth than non-planners. But is there a secret to good planning? I think there are five.

SECRETS 1 AND 2: WHEN RETIREMENT IS AT LEAST 10 YEARS OUT

The first secret is to have a vision of your future. We all know we need to save money, but it's easy to put short-term needs before a long-term goal like retirement. One way to combat this natural tendency is to make your future life as "real" as possible.

Start to think about where and how you'll want to live. Will you stay in your home or move to a new community? Scale back your working life, stop working completely or start a new venture? Do you have a lifelong passion that you want to pursue? Although you may not be able to answer these questions with certainty, simply pondering the issues will help you formulate a preliminary vision.

Once you have a vision, Secret No. 2 is to flesh out your plan financially. Consider consulting a financial adviser to discuss the following:

--How big of a nest egg will you need to make your ideal retirement a reality?

--How much should you be saving every year to get there?

--Which retirement accounts make the most sense?

--How should you invest?

--How can you balance saving for retirement with paying for family obligations such as your kids' educations?

SECRETS 3 AND 4: MAKING THE TRANSITION INTO RETIREMENT


Carrie Schwab Pomerantz

Carrie Schwab Pomerantz is a Motley Fool contributor.

Be the first to read Carrie Schwab Pomerantz's column. Sign up today and receive Townhall.com delivered each morning to your inbox.