4 Red Flags That Your Retirement Plan May Be Off Track

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If you're 55 or 60 years old, the end of your working days may be in sight. After all, most people retire somewhere around age 65, so you may assume you will also. But how prepared are you?

Take a look at the following potential unpreparedness indicators. After reviewing them, if you don't see any concerns, you may, indeed, be headed down the right path toward retirement. However, if you do, it'll be far better to address them now while you're still gainfully employed. (See also: 5 Financial Moves You Should Make Five Years Before Retirement)

1. You haven't run the numbers

Ignorance may be bliss when it comes to the latest neighborhood gossip, but not when it comes to preparing for retirement. Now is the time to estimate your post-career income and expenses.

Start with your anticipated monthly expenses. Some of your outgo categories may disappear in retirement, such as contributions to your retirement plan, commuting, and other job expenses. Others may at least decline, such as how much you spend on clothing. (See also: How Much Can You Afford to Spend in Retirement?)

However, some expenses might actually go up, at least temporarily. Many retirees find that they spend more on travel and entertainment initially, but less as they get older.

Next, add up the monthly income you expect to receive. How much is your Social Security benefit likely to be? Find out through the Social Security Administration's estimator. How much are you likely to have in your retirement account by the time you retire? The Fidelity Retirement Score calculator will give you a ballpark idea.

What's a conservative estimate for how much you could withdraw from your retirement nest egg each month? One popular rule of thumb is that you should be able to safely take 4 percent of the balance each year without having to worry about running out of money.

What other sources of income will you have?

Planning future income and expenses isn't a perfect science, but running some estimates may help you avoid unpleasant surprises. (See also: 9 Unexpected Expenses for Retirees — And How to Manage Them)

2. You haven't saved enough

One of the most unpleasant facts you may discover by taking the step above is that you haven't saved enough. According to the Employee Benefit Research Institute, almost half of workers ages 55 or older have less than $100,000 set aside for retirement. That won't go very far.

Let's say you're in better financial shape and are on target to have a $250,000 nest egg by the time you retire. Using the 4 percent rule mentioned above, even that amount will allow you to withdraw just $833 per month. (See also: 4 Retirement "Rules of Thumb" That Actually Work)

What to do? Plan to stay on the job longer. Doing so will increase your Social Security benefits (when I checked my benefits, I found that waiting until age 70 would boost my monthly benefit amount by 28 percent vs. taking benefits beginning at age 67). Plus, that will give you more time to build a larger retirement nest egg. (See also: 6 Ways You Can Cut Costs Right Before You Retire)

3. You still have a mortgage

For most people, a mortgage is their biggest monthly expense. Making sure your mortgage is retired by the time you retire is ideal. However, a growing number of older homeowners are bringing mortgages into their retirements. Many of them refinanced into a lower interest rate in recent years, but reset their 15- or 30-year mortgage clock in the process. If that's you, here are some options to consider:

If you're planning to move after you retire, and especially if you'll be able to downsize into a home you could buy outright with the equity in your current home, no problem. (See also: 5 Countries Where You Can Retire for $1,000 a Month)

If you're planning to stay put, you might consider paying extra on your mortgage in order to wipe it out by the time you retire. But you'll have to weigh that against the potentially better benefits of using that money for added contributions to your retirement plan.

Keep in mind that this isn't a strictly mathematical exercise. Many people argue that it would be more profitable to invest more through your workplace retirement plan than accelerate payments on a low-interest mortgage. However, you may decide that the emotional benefit of being out from under your mortgage is more valuable. (See also: Is it Safe to Re-Finance Your Home Close to Retirement?)

4. You still have student loan debt

A surprising number of older people have education debt, usually because they co-signed on a loan for a child or grandchild who is unable to make the payments or because they took out a Parent PLUS loan. If that's you, consider consolidating your loans to a lower interest rate (you can even "consolidate" a single loan). Then put your loan payoff on a faster track by paying more than the required amount each month.

This list isn't meant to discourage you; it's meant to help you prepare to retire successfully. Where else do you need to shore up your retirement plan?

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