Painting a rosy retirement

To avoid going broke, you'll have to estimate how much you can spend after you stop working, and plan accordingly. The answer will depend on a number of factors, including your age at retirement, how much you've saved, which assets (if any) you plan to leave to your heirs, and how long you're likely to live.

What's fairly certain is that you'll need a pretty significant nest egg to retire comfortably, given that you may still have a long life ahead of you after you retire: living until age 90 or 95 is far more common than it once was. And a long lifespan translates into a lot of trips to the grocery store, a lot of years of housing costs, and, depending on your lifestyle, a lot of money spent on travel and entertainment.

Figure out how much you can spend Okay, let's assume you've saved enough money to retire. You still have to determine the percentage of assets you can safely withdraw each year without going broke. Spend too much early on, and you could be in for some bad surprises later.

"I've had a few physicians whose portfolios couldn't maintain their expensive lifestyle," says financial planner Susan C. Kaplan, president of Kaplan Financial Services in Newton, MA. "That forced them to make some difficult decisions. One chose to do consulting occasionally to supplement his income. Another cut his spending, which made him very unhappy, and a third sold the interest he still retained in his former practice, his house, and his vacation home."

Of the three, the client who sold his practice and real estate holdings wound up the happiest and most financially secure. "He now rents a small condo and travels extensively," Kaplan says. "The income generated from the proceeds of the practice and the homes enable him to live more grandly from year to year."