Today I want to give my best advice to those getting close to retirement. That advice is to face reality. If you're a client, you know that I love to work at the whiteboard. Let's put some numbers on the board and see what your reality might be.

1. Write down your total income for last year - before taxes. Check last year's W2 if you're not sure. If you contributed to a retirement plan such as a 401k, you'll need to add that amount back in.
2. Next, check your tax return to see how much you actually paid in federal and state income taxes. Also check your W2 again to see what you paid in Social Security and Medicare taxes.
3. Subtract the total taxes paid from your total income. This is your after-tax income.
4. Now add in anything you withdrew from savings to cover your regular living expenses. If your credit card balance went up this year, add in the amount by which it increased. This yields your approximate annual spending today, and if you're close to retirement, it's a pretty good estimate of your probable spending in retirement.
5. Subtract from this annual spending your estimated Social Security benefit (you should have received a statement in the past year). The result is the amount you need to withdraw annually from your nest egg.
6. Divide this annual withdrawal into your total savings. This is the number of years your money will last from the start of your retirement.

Please do this simple exercise. Don't put it off because you're afraid to look. It is what it is. The sooner you look at it, the more options you'll have to address the problem.

Every month I will bring to your attention a book that I think you or a friend might enjoy. This month, I'm very proud to say that I'm one of 75 Garrett Planning Network members who contributed to Just Give Me The Answer$. I'm offering discounted copies--$12 per book with free shipping - while supplies last. (List price is $18.95.) Send me a check with your name and address and I'll send you the book. (NFP, 1740 Mass Ave, Boxborough, 01719)

Seven Secrets of Financial Independence - Wednesday, May 3rd, 7 to 9 p.m. To register call Acton-Boxborough Community Education at 978-266-2525 after March 22nd.