When I talk to new clients we cover a lot of ground, from their current situation to their long-term financial goals. One of the most important — and sometimes tricky — topics we discuss is their plan for retirement.

Why tricky? Let’s be honest: It’s not just about a gold watch from the boss and a farewell party anymore. Unless you are independently wealthy, retirement can mean a major change of lifestyle that demands a different way of thinking.

There are practical questions and issues to consider before taking the plunge. Where will you live? What will you do? Questions about money usually top the list.
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I look at all the parts and pieces of my new client’s financial life, including Social Security benefits, savings, rental income and their specific retirement goals. Once I have a clear idea of what they have and how much they expect things to change, I ask three questions — and then we work to formulate real answers.

Here are those three questions:

1. How much income will you really have each month, after taxes?

That depends. Have you left a trail of retirement money in old 401(k) plans that should be consolidated? Is an inheritance down the road? Do you have a pension or annuities?

If, for instance, you have 401(k) balances sitting at previous jobs, you should consider rolling them over into a single IRA. If you expect to inherit assets or cash, plan carefully and don’t rush to spend your windfall. Likewise, don’t forget to incorporate all sources of income — from rental property, for example — into your strategy.

If you’re not working, you’re not earning a salary, so getting a stable return is key. If the gap between what you have and what you need to live on is too big, you might think about staying on the job a while longer — or, if that’s not an option, taking on part-time, post-retirement work.

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2. How does that number match up to your current actual expenses?

The good news is that once you retire, you’ll be rid of some expenses. If you’re enrolled in a 401(k), for example, you won’t have to make regular deposits into a retirement account. Instead, you’ll start taking required minimum distributions from your IRA or 401(k).

Even as you’re kissing some expenses good-bye, others may hang around. Do you have a mortgage? If so, when will it be paid off and how much will that reduce your monthly spending? Some people choose to downsize; others rent. Think about what you can do to make your lifestyle less costly.

Don’t forget about health insurance. At age 65 you get Medicare coverage, but some people buy supplemental individual coverage and long-term care insurance, both of which can be pricey. Private nursing home care currently runs $91,000 per year, for instance.

As you’re tallying up the monthly costs, be sure to factor in changes in state taxes or local property taxes that affect you. Some states cap property taxes on retirees, which can make for nice savings. Some do not tax Social Security and pension income.

3. How can you bridge the spending gap?

You’ve figured out that there’s a gap between what you have and what you’ll need. The next question is, what can you do to bridge that gap? Depending on your tolerance for risk, you might decide to invest more aggressively.

You also might keep working. Increasingly, people retiring from full-time jobs and reinvent themselves as consultants or independent contractors. There’s nothing like a part-time salary to supplement a nest egg.

Or you could retire later. Research shows that the longer we work and stay active, the longer we live and the healthier we are, mentally and physically.

Charting Your Course

Of course, it’s best to plan ahead so you don’t run into problems when you can least afford them. Sketch out a budget that matches your ideal retirement lifestyle.

Once you’ve drawn the big picture, you can start thinking about how to invest for the income and growth you’ll need in the future.

Read next: 3 Secrets of a Happy Retirement

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Sally Brandon is vice president of client services for Rebalance IRA, a retirement-focused investment advisory firm with almost $250 million of assets under management. In this role, she manages a wide range of retirement investing needs for over 350 clients. Sally earned her BA from UCLA and an MBA from USC.