Six steps to take if you're five years away from retiring

Retirees are redefining what it means to be retired. If you're within five years of retirement, here are steps to take now to help attain the lifestyle you want in the future.

Step back and daydream: Think about the kind of life you want down the road. Do you see yourself living near your children? Do you want to go back to school? Is travel a priority? "Think how you will fill your time," said John Grable, a professor of financial planning at the University of Georgia. For example, you might be excited about the opportunity to golf, "but is it enough to keep you mentally and physically engaged for the next 30 years?" Get a piece of paper and draw what you would like to do in the next 10 years and in the next 20 years.

Run the numbers: Once you have goals in mind, map out your projected retirement budget. Start by listing your basic living expenses, such as housing costs, insurance and taxes. Factor in any additional costs that could arise over time. like potential long-term care expenses. Finally, add in the costs of discretionary ventures you want to pursue to enrich your retirement years. Remember, some of your current expenditures, such as the annual amounts you've been setting aside for your retirement, or commuting costs, might go down in retirement. Other expenses, like travel and entertainment, could go up. A good rule of thumb: Many experts predict that you'll need about 70% of your pre-retirement income to maintain your current lifestyle in retirement.

Save more: Statistics show that many workers simply haven't saved up enough for retirement. Not having enough money for retirement was the top concern for Americans in a recent Gallup poll. Only half of pre-retirees in American Funds' Wisdom of Experience survey expect to have more retirement income than their parents. Dianne Oakley, executive director of the National Institute on Retirement Security, recommends cutting 10% from your household budget and putting those dollars into savings. "Practice living on less by saving more." Oakley said.

Review your asset allocation: The mix of assets you have today may no longer be appropriate as you head toward retirement. In the next phase, you're going to be living off of your resources rather than a steady paycheck. That means you'll likely want to adjust your assets allocation to lower your portfolio risk. To preserve capital, consider moving some money out of stock funds and into bond funds and cash equivalents.

Weigh your Social Security options: A key decision everyone has to make as he or she approaches retirement is when to claim Social Security benefits. You can start drawing your retirement benefits at any point from age 62 up to age 70, but your benefits will be higher the longer you delay starting. Helpful tools can be found on the Social Security Administration's website, ssa.gov. Visit the site to get a detailed comparison of your retirement benefits at various retirement ages.

Make sure you are properly pnsured: Even the best-laid plans can veer off track due to unexpected setbacks, so you need to be prepared. Will your life insurance last until the day your family needs it? Has your home insurance policy kept up with inflation and have you been offered coverages to cover service lines, mechanical breakdowns, and identity theft? Have you purchased coverage to cover the things Medicare doesn't cover ? Have you thought about pet insurance to cover the medical bills?

The bottom line: You want to make the most of your retirement years, which requires a thoughtful process. Planning ahead could help you enter your next phase with optimism, confidence and peace of mind.