Retirement is something that many Americans think about (or rather should think about). Growing up I was always taught that putting money into an IRA or Mutual Fund is the way to plan for retirement. To be honest I couldn''t disagree more. I think the best way to retire is to create a portfolio of assets that create residual income/capital gains. What are your thoughts? How do you think is the best way to retire? Today''s featured article comes from creditsesame.com and takes a look at planning for retirement. Read their thoughts on the topic below:

 

When it comes to retirement, the conventional wisdom is that a couple needs at least $1 million to retire comfortably. Why $1 million? Economists, financial advisers and others say retirees should spend no more than 4% of their nest egg a year, and if they have a million bucks, that means they can spend $40,000 a year for 25 years.

 

Add the average Social Security benefit and that couple will have about $68,000 to spend, a comfortable sum even for retirees who are still paying off mortgages.

 

That’s the logic for the $1 million pot of gold that we all allegedly must possess, but let’s be honest: Many folks make due with considerably less than that. Here are five ways people of more modest means can stretch their dollars in retirement.

That’s right. It usually costs more to live in or near big cities or on or near coastlines. You can save thousands of dollars a year in real estate taxes and on home and food costs by moving to “middle America,” where the cost of living is lower. The median household income in Auburn, Ala., is only $21,630, and the winters are mild. In Blacksburg, Va., it is $26,792, and in Mount Pleasant, Mich., it is $27,621. These three cities all happen to double as college towns — Auburn University, Virginia Tech and Central Michigan University, respectively — which tend to offer lots of cultural and educational events, often priced low to attract students. One warning: If you live in a town that’s too isolated, it may take you longer to get to airports, hospitals, libraries and stores, and you’ll find that your children and friends may not visit you as often as you’d like.

The most recent statistics show that at least a third of those who are 65 and older are still paying off mortgages, and some continue to work because of these mortgages, their largest single expense. Imagine how much better you can live in retirement with an additional $12,000 to $24,000 a year.

It’s easier said than done, but having no car payment will save you hundreds of dollars a month. After you pay off your car loan, be sure to maintain your car well so it will last several years. Some retirees who no longer need to impress clients with luxury cars downsize and buy more affordable cars and save hundreds of dollars a month doing that. Whatever you do, don’t lease a car. That guarantees that you’ll continue to have large monthly payments going toward transportation.

Eat well. Exercise. Don’t smoke. All of those things you need to live a healthy life will reduce the likelihood that you’ll need expensive surgeries or other medical procedures. And if you retire before you qualify for Medicare, your health will be a major factor in the health insurance rates you pay.

There are two reasons to do it: You’ll give yourself more years to save for retirement, and you’ll receive a higher Social Security benefit. If you’re trying to decide, keep it mind that the key is whether you think you’ll live past 79. Let’s look at two examples: