The most common dream retirement dreamers have involves doing things that you never were able to do while you were working.

Many involve travel. But chances are, you have traveled and vacationed to many of the places you wanted to go while you were working, either before the kids were born, while you were raising them or as the pre-retirement empty nester. Sure, you would like to cast your travel plans wider and stay longer but the truth is, vacations without boundaries arenıt as rewarding as you might imagine.

You may already play golf, do volunteer work, or work in the garden. If the answer is "doing more of what I love" then you need to consider the cost.

Chief among those considerations are how long you will be able to travel on the income you saved, how well your health will hold out to do the things you really enjoy, or whether your ambitions will change over time.

While this sounds like so much dreaming, the fact of the matter is we rarely vocalize what we are trying to achieve in our retirement years. And we need to speak aloud about these thoughts.

The reality of the situation is this: we will have bills as long as we live. Many people refinanced their home in the last five years. If you did it using a 30-year fixed mortgage, chances are, if you were 40 or 50 years of age, you now have a mortgage that will last until you are in your seventies or longer. If you donıt plan on working until the mortgage is paid, then you will need to do some pre-paying.

Don't take those twice-a-month plans your lender may offer. They add fees to your existing mortgage and they donıt work as well as a little self-discipline.

The simplest way is the easiest. On a $1,200 a month mortgage payment, making an additional $100 a month payment towards your equity will chop off eight years of a 30-year fixed loan. Make that a $200 extra a month payment and that thirty-year mortgage will be only 18 years long.

This is a thirteenth month payment that doesnıt cost any money and can be quietly worked into the budget through automatic deduction.

Taxes, upkeep (on both houses and cars), insurance and utilities and that silent bill, inflation will not go away just because we retire. We need to free up the cash currently directed for our mortgage to pay for those necessities when we retire. Not having a house payment should not be considered a windfall. Instead, the money that was going to pay that bill should be earmarked for these often fluctuating unknown costs.

The fourth question concerns your health.
Should you get long-term care insurance or LTC now while it is cheap?

The short answer is no.

Insurance is a risk management tool and even the insurers are having a difficult time figuring how much risk there really is in covering the possibility of long-term care coverage. Right now, there aren't enough insurers to allow you to make good comparisons of products and services.

The cost of a policy, which may seem cheap now compared to the cost for similar coverage ten-years from now, would be better directed to a retirement account.

Retirees still have the option of reverse mortgaging, which can allow you to keep your home while you are able to live in it. Whole life policies protect assets as well, will build cash balance and can actually pay for themselves after a certain time. Finding enough money to cover the necessary insurances, health, home and auto will be expensive enough without adding long-term care coverage.

Long-term care insurance is still too boutique and really doesn't belong in your retirement/financial plan unless you have vast amounts of wealth to protect for your heirs. Most folks should worry about themselves first and let their heirs fend for themselves financially.

The last question you should ask is
What will make me happy?

Once the question of freedom and what you plan on doing with that newly found time is answered, once the conversation about how you will pay your bills has been addressed, once you determine how you will approach the question of post-work health, the question is what will make us happy.

This sort of soul searching is difficult for the newly retired person who has found satisfaction in their work and their interaction with colleagues. Once retirement comes into question, happiness becomes the single most important topic following the question of freedom.

In many cases, happiness is freedom and security. Retirement may give you the security or the freedom you desire but what do you do with it? Asking the question what makes you happy while you are still working will help you make the transition much easier.

Happiness can come from community involvement, the rekindling of your relationship with your spouse, or perhaps a more spiritual journey.

The easiest way do this is to list those thoughts on paper and then try to define them in some sort of order of importance. This will allow you and your spouse to align yourselves early on and come to some sort of compromise on what retirement will be like.

This value-based approach is not new yet the conversation about it is. Often the discussion comes on the cusp of leaving the workforce and is often discussed in your head, as you lay in bed in at night, alone with your own thoughts.

The benefits are three fold. First, you begin to adjust your sights to a common goal. Secondly, you can prioritize those goals based on how much they cost. And lastly, you can realign your portfolio to achieve those goals.

For instance, suppose you and your spouse share similar values about the environment. Directing your portfolio to socially responsible savings vehicles focused on those types of objectives will provide you with peace of mind now and even allow you to make guilt free increases in your contributions to those funds and their goals. "Socially responsible" cover many different types of goals such as investments in ethical, ecological or environmentally safe institutions.

Perhaps you find that you care little about the overall management of your money but want it to grow safely as you age. Picking a lifestyle fund, one that matches your retirement age with a fund that re-balances periodically to provide you with an increasingly capital-protective investment, will accomplish this and give you some measure of protection as you age.

This is a sort of fuzzy finance. It seeks to provide you with the same soul-searching exercise your hired financial planner might ask you to do. He or she might want you to wrap yourself around what you believe in and then finance it while you are still working. While it is an approach that has merit, you can ask yourself the same questions.

They are hard questions but they are better asked now before you begin eliminating your hopes and dreams, one by one, once you retire.

Additional Reading:
Mutual Funds
18 Questions about Long-Term Care Insurance