Most workers dream of the day when they swap their business attire for shorts and trade in business meetings for time on the links. Maintaining your desired lifestyle in retirement without a steady paycheck takes discipline and extensive planning, and there’s no one-size-fits-all approach.

“There is a high correlation between the action people take and seeing results,” says Jean Setzfand, vice president for Financial Security at AARP. She adds that the level of action in financial planning is a good predictor for financial freedom when the golden years roll around.

“How someone fares financially after retirement is directly tied to three factors-- their salary level at retirement, how long they work beyond 65 and how much and whether they save in a defined-contribution retirement plan during their working lifetime,” says Nevin Adams, director of education and external relations and co-director of EBRI Center for Research on Retirement Income.

Know Where You Spend Money

Whether you’re planning for retirement or in retirement, knowing your expenses is important. “Not just your fixed expenses, like rent and food, but also your discretionary expenses, like vacations and other payments that don’t occur monthly,” says Michael Goodman, certified public accountant and president at Wealthstream Advisors. 

Many budgets don’t change significantly in retirement, especially if they stay in the same home, but, for example, there are adjustments for travel or whether someone eats out more or less.  “As people age, their budgets will change and some costs will disappear, but these may be replaced by health-care costs,” says Ted Sarenski, certified public accountant financial planner and CEO of Blue Ocean Strategic Capital.

With life expectancy for Americans at 78.1 years, according to the World Bank, “50% of the population lives beyond the life expectancy,” says Goodman. Taking this into account, you should be conservative with your life expectancy when calculating how much money you will need.

Calculate How Much You Will Need

When calculating how much you will need to cover retirement funds, Goodman suggests using investment earnings and a portion of principal in a retirement account. And while planning for life after work should start in your 20s and 30s, realize that there will be a significant shift in lifestyle.  

“You should have different sources of income in retirement,” says Sarenski. “Social Security only replaces 25% to 30% of your preretirement income.” If you need $50,000 for retirement annually while receiving $15,000 from Social Security for example, you calculate the amount of savings needed by dividing $35,000 ($50,000 minus $15,000) by a conservative 5% or multiplying $35,000 times 20 years. In this example, you would need $700,000 in savings.

“If that number they need to save seems high, they can take steps to start saving by living on a tighter budget and eliminating debts,” says Setzfand. “The sooner you start, the smaller the amount you have to set aside.”

Make Changes Now that Carry On Later

Living on a tight budget and watching expenses during your working years leads to more funds in retirement. “If you save $1,000 more per year, you cut your budget by $1,000 and will need $1,000 less every year in retirement to maintain your standard of living,” says Steven Sass, program director of the Center for Retirement Research at Boston College.

“Most retired people own their home, and while it’s their biggest asset, it’s also their biggest expense,” he adds, suggesting that moving to a smaller home can free up more funds for travel and other.

Use employee retirement plans to save and create retirement wealth. “There’s a move toward a ‘use of default’ with employer retirement plans where employees are automatically enrolled in a plan with a deduction taken out of their paycheck and enrolled in a target-date fund that changes its risk profile based on your age,” says Setzfand. “This makes it much easier for someone to get it right.”

Play the Social Security Game Right

The longer you wait to draw Social Security benefits, the more you can collect.

While you can start collecting Social Security at age 62, waiting a few years to claim these benefits can make a significant difference in your retirement incomes stream, with benefits increasing between 6% and 8% each year until the full retirement age of 70. Drawing at age 70, gives a 75% higher monthly payment if you collected at 62. “Claiming later is an easy way to get more retirement income for decades,” says Sass. “This is especially important for married couples because the surviving spouse will get the higher amount.”

The higher payment can also hedge against a longer than expected retirement, adds Goodman.

Work Longer if it Makes Sense

“Working longer not only helps you to delay social security payments, but it also allows you to continue to receive benefits like health insurance,” says Brent Neiser, director of Strategic Programs and Alliances at National Endowment for Financial Education. “People aren’t eligible for Medicare until they’re 65 years old.” Private health insurance can cost upwards of $1,000 per month.

Know Your Tax Issues

Retirement plans are taxed differently. Annual contributions into 401(k) plans and IRAs reduce your taxable income for that year, and only post-tax money can fund a Roth IRA. Money in 401(k) plans and IRAs benefit from tax-deferred compounding as capital gains, interest and dividend distributions are not taxed when they’re received. Withdrawals from employer 401(k) plans and traditional IRAs are taxed while money withdrawn from Roth IRAs is not taxed.

“If you’ve saved a significant amount of money in 401(k)s and IRAs, every time you take money out of your retirement accounts, it’ll be taxed,” says Goodman. Since, whenever you withdraw money, you also have to withdraw enough to cover the tax, Goodman suggests diversifying into Roth IRAs if you’re eligible.

For 2012, individuals who are married filing jointly and earn less than $183,000,  and single filers earning less than $125,000 per year can, depending on age and income level, can contribute up to $6,000 into an account.

Neiser recommends that people also save money outside of a tax-deferred account, especially those close to retirement. “People need to broaden the range of savings vehicles that hold their money,” he adds.

Geography

Where you live can have an impact on your retirement income. If you decide to relocate, “when considering a new retirement state, consider the state’s taxes, climate, cost of living, health care like doctors and hospitals,” says Katie Ross, education and development manager at American Consumer Credit Counseling.

States like New York and Connecticut, for example have higher incomes taxes and costs of living while states like Florida, Texas, and Nevada, for example, do not have state income tax.

Health Care

Health care can be a significant part of a retirement budget. When on Medicare, “there are many out-of-pocket expenses that people think they’re not responsible for, but that’s not the case,” says Setzfand. She advises that people take into consideration the projected costs for health care that are higher than your current costs.

Experts recommend that retirees take advantage of Medicare and a supplemental policy to cut down on health care costs. “If you don’t sign up for Medicare when you’re 65, Medicare can cost more unless you had health insurance,” says Sarenski. When you stop working, you have seven months to sign up before you’re assessed a penalty that’s paid every month on top of your premium.”

“The most important thing to consider is to figure out ways to maximize your retirement income stream and the different decisions surrounding that,” says Neiser. He also suggests coordinating and optimizing different decisions to maximize your benefits.

Preparing for retirement is a long process. “The most important thing to consider is to figure out ways to maximize your retirement income stream and the different decisions surrounding that,” says Neiser. Experts agree that the sooner you start to plan and save, the easier it will be to live the life you want during retirement.