First, you should prepare a detailed analysis of your expected expenses after retirement. Sure, some expenses will decrease, typically commuting, work-related expenses, savings amounts, and possibly taxes. But other expenses are likely to go up, including travel, entertainment, and health care. How much you will need depends in large part on how you plan to spend your retirement years. Thus, it's important to really take a hard look at how you plan to spend your retirement years, so you can make reasonable estimates of how much it will cost.

Keep in mind, however, that things seldom go as planned. A recent survey of retirees found that 18% expected their retirement expenses to be higher than their preretirement expenses, but 39% actually had higher expenses (Source: The Wall Street Journal, May 12, 2007).

How can you help ensure that your expenses will be lower? Consider these tips:

• Pay off your mortgage. Mortgage payments often consume 30% or more of an individual's gross income. Eliminating this expense can drastically reduce income needed for retirement. If you can't pay off your mortgage, consider selling your home and purchasing a smaller one for cash. Not only will you eliminate the mortgage payment, but a smaller home often results in lower ongoing expenses, including lower utility bills, property taxes, and maintenance costs.

• Get rid of other debts. It's not unusual for consumer debt payments to equal 10% to 20% of an individual's after-tax take home pay. Try to enter retirement debt free.

• Keep your automobile. Instead of purchasing a new car every couple of years, keep your current car for as long as it's in good working order. That will eliminate car payments from your retirement budget.

• Look for ways to reduce travel and leisure expenses. Look for and use senior discounts. Plan activities for nonpeak times, when rates may be lower.

• Consider relocating. The cost of living varies significantly from city to city and state to state. You may be able to reduce your living expenses substantially by moving to another locale. However, this is more than a financial decision. You also need to decide whether you want to move away from family, friends, and familiar surroundings.

• Work at least part-time. If you still don't have sufficient funds to support yourself during retirement, consider working at least part-time. Even a small amount of annual earnings can help significantly in funding your retirement.