Children. By the time most of us retire, our children will be on their own. We hope. But maybe you'll want to help your son with the down payment on a new home. Or maybe your thirtysomething daughter has returned home, forcing you to put off dreams of condo life for a few years. Once a parent, always a parent -- so budget like one.

Other items to include in a retirement expense form: transportation costs, which include cars, gas and insurance; taxes, which, thankfully, should decline for many of us; and those monthly bills for cable television, Internet access or cell phones. It adds up.

Number of years in retirement

Next, project how long you'll need to be paying for your goal.

Say that your goal isn't retirement, but sending your child through college. Will that expense stretch out over four years? Or is postgraduate study in the little one's future, too? Or maybe your goal is saving for a home and paying off a mortgage. The easy part is figuring out what you'd like to put down. But do you plan to use your investments to help pay your mortgage? If so, the goal for this pool of money may extend over 20 or 30 years, depending on the terms of your mortgage.

Back to the mother of all financial goals, retirement. Here, you need to consider just when you want to bid the working world farewell. Have you dreamed of an early retirement, or are you someone who can't imagine not working at least part time?

Then, unpleasant as it is, you'll need to project when you'll bid the world adieu. When it comes to life expectancy, think long. While most of us won't become centenarians, it's better to err on the side of longevity. Otherwise, you may run out of money.


When it comes to money, inflation is your worst enemy. $120,000 a decade from now will not have the same purchasing power as $120,000 today.

It's essential to make some assumptions about future inflation rates when estimating how much your goals will cost. When it comes to retirement planning, many advisers use a 2%, 3% or 4% inflation rate.

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(College costs, however, have been growing well ahead of inflation. Some advisers recommend using higher rates when calculating future college costs.)

Congratulations, you now have some idea how much money you'll need to fund your goals. In the next few courses, you'll discover how to invest to meet those goals.