You have made the decision to retire, but you lay awake at night wondering if it is the right decision. A rash of questions and worries run through your mind. Will you have enough money in retirement? Should you put it off, another five years? How should you manage your money? What will you do with your free time?

It’s enough to stifle decision-making. The worries, however, will begin to fade away once you cast your decision in stone. To help you get on your way let me try to address some of the retirement issues that have come up in my practice.

Defined Benefit Pension Plans

For those fortunate enough to be part of an employer-funded pension plan you will be faced with choosing between a Single Life or a Joint Life payout on your retirement plan benefits. The main difference between the two is that the Single Life will result in a larger check since it is paying pension benefits out on the life of only one spouse. If the retired spouse were to pass away, under a Single Life payout, the pension income would end and the surviving spouse would be left without any income from the pension plan. This is why many often choose the Joint Life payout, but this is a mistake. It may make much more sense to take the Single Life payout option and invest the payout difference in a permanent life insurance policy. The beauty of this strategy is that at some point the policy can become fully paid for, meaning you can stop making premium payments, but the policy will continue to provide benefits and this strategy can actually cost you less than the lost benefits that would result if you chose Joint Life.

Social Security and Earnings

If you are considering retirement but you are not yet at full retirement age for Social Security purposes you need to tread lightly. The Social Security Administration penalizes those who elect to receive social security benefits at age 62 by limiting how much money they may earn from age 62 to full retirement. In 2007 if you are under full retirement age and earn more than $12,960, every two dollars ($2.00) of earnings over this amount will require you to return one dollar ($1.00) of social security benefits. In the year you reach full retirement you cannot earn more than $34,440, otherwise you will have to return one dollar ($1.00) for every three dollars ($3.00) over this amount.

Where To Live?

States without any income tax include the following: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming. New Hampshire has an income tax but only on certain unearned income such as interest and dividends. Some locations with the lowest cost of living include:

Douglas, Georgia, Bismarck, North Dakota, Bowling Green, Ohio, Branson, Missouri, Fort Collins, Colorado, French Lick, Indiana, Sugar Land, Texas, State College, Pennsylvania, Hendersonville, North Carolina, Lawrence, Kansas, West Minster, Colorado, Spokane, Washington, Hot Springs, Arkansas, Oxford, Mississippi and Athens, Georgia. Each one of these fifteen locations boasts housing prices under $240,000. Florida has become too expensive to live for most retirees, primarily due to the unprecedented appreciation in the cost of real estate over the past ten years.

If you have romanticized the idea of moving out of the U.S. keep in mind that Medicare will not cover you outside the U.S. plus the U.S. healthcare system, despite its expense, is among the best in the world. If you live in a home you own outright (no mortgage) in New Jersey on a limited fixed income under $40,000 you will be living close to poverty if you stay in New Jersey. New Jersey is simply too expensive for retirees due to real estate taxes that continue to spiral out of control, expensive auto insurance and an overall higher cost of living than in most parts of the U.S.

Leaving New Jersey as you near retirement is no longer becoming an option for retirees; it’s become a necessity if you want to stay out of poverty.

Where Should You Invest Your Money?

I have many retiree-clients who invest all of their liquid assets in CDs. They feel CDs represent the best, safest option. Unfortunately, they are grossly mistaken. CDs, when adjusted for inflation and taxes, will result in a loss of retirement money. CDs are among the most volatile of all investments. All you need to do is go back in time to 1981 to see this volatility. In 1981 a one-year CD came with an interest rate of 15.5%. Today most CDs are in the 4.5-5% range. That’s volatility! Investing solely in CDs is a sure-fire way to go broke over time.

The smart investment advisors persuade their retiree-clients to reduce their interest rate risk by investing their retirement among four assets classes: Stocks (25%), Cash (25%), Corporate Bonds (25%) and Government Securities (25%). This investment strategy is known as an Asset Allocation Investment Model and is actually much safer than CDs and generates greater returns in the long run. Some Variable Annuities offer Asset Allocation Investment strategies built into the annuity itself and, thus, may offer a simple solution to retirees. I like Variable Annuities for retirees because they provide a guarantee that you will not lose your investment and offer "Guaranteed Growth" riders, which range from 5% and up. Of course these guarantees are only as good as the institution backing the annuity.

The best piece of advice I can offer you is to spend an hour, face to face, with a financial advisor who offers retirement planning as one of their core services. This would be an hour well spent and gets you on the right track toward retirement.