It's hard, but first off - relax. You don't want to be making any decisions when you're in a panic mode. It's just too easy to make mistakes when you feel vulnerable. No matter what, retirement and/or a change in life is always a leap of faith and when you've done your best to work out a smooth transition, it generally all falls into place.

In no particular order:

Make arrangements to have a talk with your 401k administrator even though retirement is over a year in the future; they're in the best position to discuss options with you. Once retired and no longer actively contributing to the plan (and having reached the age of 59 1/2) you can start either taking the 401k in monthly installments for X number of years to augment the SS payments, or withdraw some funds for a purchase, etc. without the customary 10% early withdrawal penalty and leave the rest to keep accruing until you must start withdrawing funds at age 70 1/2.

If you're a member of AARP, they have a personal health insurance plan underwritten by United HealthCare Insurance Company (www.aarphealthcare.com) that might be worth looking in to.

I'm always a little torn on life insurance; is that something everyone needs? With grown children, etc., does life insurance do anything more than guarantee funds to cover funeral expenses or provide a few dollars for the surviving spouse to get grounded once again? I have a life insurance policy as a benefit of retirement - and with no husband or children, all these assets will simply plow into my estate for whatever will be left for my heirs after my final expenses are dealt with. I've also made it known I want no funeral of any kind and only a simple cremation. I do have a spot in the family plot (we took care of the cemetery business as a family about 10 years ago) for my "cremains" when the time comes - hopefully, many years from now - and will arrange in advance for my footstone to be placed and for my heirs to have the dates chisled, etc.

Have all your legal documents in order - seemingly a less taxing factor while still actively working: wills, Trusts (Trusts are such beautiful instruments for avoiding probate), Powers of Attorney, End of life Documents, DNR's, No CPR's, up to date lists of beneficiaries, lists of assets and where they're located. These things have nothing to do with what is generally considered to be in the process of retirement, but they do tend to get put aside to be taken care of later. Sometimes "later" happens and people are caught unprepared. And I've dealt with a few elerly relatives who left messes behind because they trusted when the time came everyone would "do the right thing". Wow, if they only knew how much time and energy went into doing the right thing...!!!

Keep track of your expenditures for the next year or so, no matter how small - it gives you an idea if a corner needs to be cut somewhere or if you're sacrificing some enjoyments in favor of saving. Some things will always be beyond your control - like inflation, the cost of utilities, gasoline, health care, home insurance and property taxes.

Is this a time to start using some of the things you put aside for future use - like the nice table cloths, dishes, silverware, glassware? Time to declutter, either finishing or dicarding the old projects laying around? Too many old books you won't reread, old clothes shoved to the back of the closet? These things don't necessarily help with finances, but decluttering is liberating and frees you up for what you're really interested in doing. And some traveling and fishing and spending time with family sounds pretty good.

If you do not have a will, get one and a good lawyer will also help you get your legal documents in order. Read all the articles you can on different ways you can retire and survive. Don't do anything with your 104K without legal advice. Your bank can help you with that. Do you have children? As to insurance, you cannot collect medicare until you are 65 so plan for something. AARP is fair but may not be the best for you. Plan ahead--hobbies, volunteer, travel etc. DO NOT go out and buy a RV and start travel unless you have done this already. There are many ways to travel cheap. Bus/train--with special senior passes, etc.
Good luck

I think that you will have to run the numbers really hard to see if this can be done. You will have an income of about $1800 a month. If you pay off the car, you will have more disposable income, but unless you totally pay off the house, you will still have that payment every month (unless you refinance).

The first thing I would do is list every expense that you have every month. Do that for a couple of months. See what you spend on everything. Then, you will be able to see what your income will allow you to do. At the very least, I wouldn't retire with a car payment.

Retiring before 65 means that you have to pay for health insurance. It is not uncommon to hear of people paying $600+ a month for that until Medicare becomes available. That is a big chunk of your $1800 a month. Even a Medicare supplement will cost you a $200 a month for the both of you once you turn 65.

Can you get a part time job to help pay the car off before your husband retires? Even $200 a month extra could bring down the balance faster before he retires.

If you have $400,000 to $500,000 in your 401k account, then you will probably be okay. However, if it is much less, then any serious medical problems before age 65 could really put a big dent in your retirement plans if you don't have insurance.

There has been a huge increase in food and gasoline costs in the last year or so. Make sure you allow for that.

Make sure that you have a fund to cover repairs to your home. Make sure that you have no credit card debt before he retires. Also, if your husband should die first, will you have enough income to continue your life style? Depending on your expenses, you might be able to do it. It would be a lot easier if you had your car paid off, and he worked another year or so to build up his social security and lessen your out of pocket health insurance costs.

I don't understand why your husband's SS is 1400 and yours isn't 700. Is there some piece of information missing? A wife collects on her own record plus additional if it doesn't add up to half or more of her husband's.

I would wait until 65 unless your husband's physical or mental health is in jeopardy. My husband is going to try for 70. He is 61 now so who knows. I am 60 and already retired, but I was laid off and then developed several medical conditions.

Hello heidiho,

I'm interested in at what level your proposed monthly income after retirement will be relative to your current rate of income.

Will there be a significant reduction?

What kind of allowance for inflation is built into your retirement income program? Though there may be a factor for inflation included in social security benefits, seldom does it cover the full amount of inflation. And we have seen significant increases in costs of some of the basic needs of life in recent years, utilities, food, (can anybody spell "gas"?), etc.

Unless you have a large retirement fund, I'm concerned about your proposed income level in retirement, especially since you still owe on car and house.

I'm afraid that you will find that you need larger withdrawals from your retirement fund to add to your pension income in order to pay essential ongoing costs than it can afford and keep paying your way until your need dispears ... when you do!

It isn't any fun to be broke at 80. Little larger fun having health good enough to cope in case of being forced to return to work at a similar age in order to pay essential costs!

Will you or your husband be interested in taking on less stressful employment, part- or full-time, for a number of years?

For several years I worked as a security guard, at little above required minimum pay rate. I could choose to accept or reject non-regular assignments and usually accepted assignments for substantial periods where I had no more than about 10 min. of work per hour, apart from ongoing vigilance, related to the client - which allowed me about 50 min. per hour to read or do my own thing.

Good wishes for finding a system that'll work for you - now and through all of the remaining years of your life, without financial worries.

ole joyful

Took me a while to digest your helpful thoughts and I want to thank all of you for the encouragement and ideas you all gave me. I did settle down and quit losing sleep over this. I have read all of your suggestions and will try to talk to people in the professional field that are more able to handle this than myself and will take it one step at a time and your concern and thoughtfullness is very much appreciated.Thanks so much for your help.

I have read through the recommendations, and I agree with them. But I would like to add one more thing: When your husband retires, he should consider doing a 401K rollover. This has no tax consequences. The money is still tax deferred. What you are doing is transferring the money in the 401K to another account, usually a mutual fund company like Vanguard, Fidelity or T Rowe Price. They're the 3 biggest and most reliable. The reason to do the rollover is that most 401K accounts do not divulge the expenses they charge for managing the accounts; that expense in buried in the numbers so it doesn't show. Expenses can add up and cost you. With a company like Vanguard you can be assured that your expenses are rock bottom, which means that you'll have more money in your pocket. The other reason for doing the rollover is that with a large mutual fund company, you'll have a wide choice of well-run funds from which to choose, whereas in 401Ks the choices are very limited.

You have plenty of time to do your homework to find out about mutual funds. Look them up in MONEY magazine or your local newspaper, but don't be distracted by the advertisements. Read what qualified finiancial analysts are recommending. And stay from any brokers who offer to manage your money for you. They'll charge you a lot of money, and their fees will be hidden like the 401K. One moe tip: Go to the library and find a good book on index mutual funds. They are the cheapest and safest.

For your 401K during the time before your husband retires, the big question is: Is the money in the 401K safely invested? The "asset allocation" is the key for figuring if your money is invested right. Asset allocation is the percent you have in stocks, bonds, and cash equivalents. As we get closer to retirement, we need to invest less in stocks and more in bonds and cash equivalents (money market funds). But you still need to have some money in stocks because they protect in the long term against inflation. You probably should have between 25-40% of your 401K in stocks. You will need help in figuring your asset allocation because it's the most important investment decision you make for your 401K. But you have time to figure that out. Do your homework, and ask a lot of questions.

Have you ever though about retiring in another country where the cost of living is not as high. Im a Canadian living in the Dominican Republic my pension is less than yours and I have built a new house with swimming pool here and my medical insurance is for my wife and me $500 per year I did this on my pension. I have all the convenience that I would in Canada and no the cold weather.