Once you know how much money you will need for retirement, you should decide which sources of retirement income are already available to you. Start with government resources (in most cases, Social Security). The amount of your Social Security benefit is determined mainly by two factors: (1) your average salary during the years you work and (2) when you begin receiving benefits. Most individuals become eligible to receive Social Security at age sixty-seven; however, if you defer receiving benefits until age seventy, the amount of your monthly benefit will be increased. Estimate how much money you will receive from Social Security each month and multiply that amount by twelve. I recommend that you go to www.socialsecurity.gov and request information regarding your Social Security benefits. See the section on Social Security from this Web site for more information about Social Security.

There are two ways you can sell your home. You can simply sell your home for cash (usually to another family), or you can sell your home through a reverse mortgage. With a reverse mortgage, the buyer (usually a bank or investor) pays for the home, and you, the owner, can stay in the home until you die.

If you want your home to be a part of your retirement plan, begin by determining the current value of the home. Current appraisals are good starting points. Next, estimate how much your home’s value will increase by the time you retire . Again, be conservative in making your forecast. For example, I usually forecast housing growth rates at below or near forecast inflation rates . Finally, determine how much you will owe on the home when you retire. Many people have a goal to have their mortgages paid off before retirement. However, if you expect to still have a mortgage when you retire, allow for mortgage payments when calculating your retirement expenses. Some people plan to buy another home after they retire; this is an additional expense to consider.

Using a financial calculator or a spreadsheet program, solve for how much these retirement assets will be worth at retirement. Set your present value equal to the current value of these assets, set N equal to the number of years before you retire, and set the interest rate equal to the estimated growth rate of these assets. Then solve for the future value. This calculation will reveal the amount of retirement money (in future dollars) that is available to you from outside resources.