5 tips to help you plan a relaxing retirement

Most of us aspire to relax and enjoy retirement.

But for many, that prospect appears bleak as savings diminish and health care costs rise. Add a volatile market, uncertain economy and the fact we're living longer, and — wham! — you realize you're not in financial shape to stop working.

Follow these 5 tips to help get your retirement years closer to the dream you've envisioned.

1. Retire when you're ready.

Just because "everyone" retires at age 65 doesn't mean you have to do the same. Ask yourself, 'Do I want to retire and do I need to retire?' and 'What am I walking away from?'. Working longer could help you maintain yourself, financially and mentally. You could also consider saving more for retirement, and maintaining employer-provided health coverage to help avoid driving yourself or your spouse crazy.

2. Consider when you should take Social Security.

Nearly half of Americans take Social Security before full retirement age. Once you start, it's irrevocable, and you can leave hundreds of thousands of dollars on the table. For each year you delay benefits past age 62, you gain a 6 to 8% increase in lifetime annual benefits. That adds up quickly, so be sure to think twice before you claim Social Security.

3. Consider all your employer payout options before deciding.

Many companies with pension plans give employees the option of taking their pensions as a lump sum. For most workers, sticking with your pension is the better deal. The biggest advantage is payments for life. Though a big check may be tempting, you lose the purchasing power of your employer. Even if you cash out and buy an annuity on the open market, you may receive much less than if you had stuck with your plan.

4. Remember insurance.

Many workers receive employer provided life insurance. When you retire, you may lose that coverage but still have financial obligations such as dependent children, a mortgage or a car loan. Consider obtaining a private life insurance policy if you're entering retirement with debt or if you would lose benefits if you or your partner dies. You'll also want to consider your health insurance needs, as health care costs can be one of the largest expenses for retirees.

5. Protect your nest egg.

We've all heard these retirement rules: Spend less, and your money may last longer. Spend more, and the reverse may be true. Take less risk with your investments and, all things being equal, your money may run out faster. Live longer than you think, and oops! Don't rely on these rules alone. Your retirement plan should depend on your unique circumstances. Keep in mind that good planning is an ongoing process, so you'll need to review and adjust your plan periodically.