If you watch or read the news at all, you've surely heard numerous stories about Canadians of retirement age who can't afford to stop working. It’s becoming a familiar story these days, but one that can have a happy ending.

Where do most people go wrong? They don’t have a financial plan -- and having some sort of financial road map can really help. Here’s why.

Get focused

The biggest benefit to planning is that it helps you focus on your financial goals. Want to full-out retire at 65? Outlining what you spend and all the assets you hold can help you see exactly how much money is coming in and going out.

Cut excessive spending

A lot of people spend copious amounts of dough on eating out, watching movies or shopping on the weekends. More often than not, they don’t even realize how much they’re spending; they just charge it to their credit cards and worry about the bill later.

A plan involves accounting for every dollar you spend. If you think $200 a week on restaurant bills is a bit excessive, cut it back by, say, half and put the savings toward your retirement.

Choose the right investments

A lot of people either trust their advisers to invest wisely or pick a few of their favourite stocks and hope they don’t go bust. Developing a plan will help you figure out what type of investment return you’ll need to achieve your goals.

If you need to make six per cent a year, you might buy high-yielding stocks. If you only need your portfolio to grow by three per cent a year, you might want to own more fixed income. A plan helps you make more-informed investing decisions.

Take a vacation

You don't want to realize too late that you can’t afford that European trip you always wanted to take in retirement. Planning early lets you save for specific indulgences. If you want to buy a condo in Florida when you retire, for example, you can earmark part of your paycheque for that purchase. Same thing for that vacation. You’ll have to give something up during your working years -- maybe one less movie a week -- but plan ahead and you’ll be able to do whatever you want later on.

Stress-free living

All those people talking about how little they have for retirement have another thing in common besides not having planned -- they look extremely stressed out. Knowing exactly how much money you’ll have in your post-working years should eliminate all that financial stress. Not only is it healthier not to worry about money in your golden years, but after working so hard for decades, you want to enjoy your free time.

You don’t need an adviser to create a plan. Websites like Mint.com make it easy to see all your expenses and create budgets. A spreadsheet can also do the trick. Figure out what you’ll need in retirement -- factor in those trips, greens fees or other indulgences -- and see what you’re spending today. Then come up with a plan that will guarantee that you’ll have enough to retire when you want.

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