We are well into tax season, and that presents a good opportunity not just to look at your earnings and tax liabilities, but to re-evaluate whether you are on track to retire and achieve other long-term goals.

Unfortunately, few individuals take an in-depth look at their complete financia picture every year. And most financial advisors only do a simple portfolio review. But I believe being prepared for retirement merits the extra effort.

Investors should sit down around now and take a close look at how much money they're making. They also need to understand how much of their income—after taxes, retirement savings, and debts such as home loans—they are actually using.

Remember that in retirement, you will likely not have the same expenses you currently do. Retirement savings won't be necessary, and you'll likely have your mortgage paid off. You'll then need to figure out how much income you'll need in retirement, adding 3% annual inflation to protect your buying power.

Here's an example. Let's take a 45-year-old married couple earning $150,000 a year.
After tax deductions and exemptions, they pay around $30,000 in taxes every year, bringing them to $120,000 of spendable income. Will they need the same amount of annual income once they retire at age 65? Not likely. For starters, their $2,500 monthly mortgage payment, including taxes and insurance, will just become $500 in taxes. And they'll no longer be contributing $10,000 a year for retirement savings.

That brings their retirement income needs to $85,000 a year; and 20 years from now, that will be $170,000 after inflation. Social Security will provide a big chunk of that: Let's say the wife gets $24,000 a year, and the husband gets $36,000. The gap is now down to $110,000.

Since the couple don't have corporate pensions, they'll need to generate $110,000 a year from their retirement savings. They will need $2.2 million to throw off that amount of annual income over the course of their retirement.

Based on this information, I can tell clients whether they're stashing away enough for retirement, or need to be saving more. And I can calculate the rate of return that they'll need to grow that savings to $2.2 million.

If they're ahead on savings, they can breathe easy. If they're behind, they know what they have to do. Either way, the clients will end up with peace of mind that they'll have the income they need. Remember, your savings rate is the part of the retirement equation over which you have the most control. You can't force the markets to give you a certain return, but you can definitely discipline yourself to contribute the right amount to your savings.

Bear in mind that this annual check-in can and should cover changes in your personal life and career. Maybe you've changed jobs, or remarried. Maybe one spouse has retired. Are you living larger these days? Or more modestly? All of that helps determine the amount of retirement income you'll need, and sets the stage for any needed adjustments you can make right away.

If you're reading this and feeling like you want more confidence about being on track for your retirement, feel free give me a call, and I'll be happy to review your situation.