Saving for retirement is a priority for many, but few people actually have a plan in place to help them convert their hard earned wealth into a steady stream of retirement income. No matter how much you're saving, chances are you haven't thought about all the broad range of factors that could affect your ability to make those savings last through your retirement years.

As the first of the baby boomers officially become eligible for retirement, there is potential for strain on the health care and Social Security systems, as well as the investment landscape. Therefore, it is increasingly important for individuals to not only have a plan in place to continue accumulating wealth, but also one for generating a steady income stream that they can live from during retirement.

While retirement may seem far off for many, it's important to keep in mind that more and more people are retiring early. And with increasing life expectancies, individuals will need to make their money last even longer.

Underestimating your longevity is just one way to exhaust savings during retirement. However, to develop a realistic retirement income plan, you will need to think about other factors as well. First, what will your sources of income be during retirement? In other words, where will your "paycheck" come from? Chances are there will be more than one source of income, such as pensions, Social Security, investments, and earned income if you decide to continue working.

Once you've determined where your money will be coming from, you also need to look at how you want to live during retirement. Lifestyle choices will greatly affect your retirement income needs. Maybe you want to travel, or pursue a hobby. Maybe it's been your dream to help finance your grandchild's education.

Most people have always thought that they would spend less money in retirement. The house would be paid off, the kids would be gone, and life would be slowing down. You might be surprised to find out that your income needs may actually increase during retirement though. Look at it this way. What day of the week do you spend the most money? For most people, the answer to that question is Saturday. Well when you retire, you've now got six Saturdays and a Sunday each week. It's crucial to consider this when preparing your retirement plan.

Purchasing power should also be considered as you look ahead to your retirement income needs. Even a relatively mild annual inflation rate can erode purchasing power. For example, at an inflation rate of three percent, the $100,000 you have today will be worth only $55,368 in 20 years - a loss of 45 percent in value.

So how do you keep up? Having a portion of your assets invested in the market is the only way over time to significantly exceed inflation. It's quite obvious that recent events in the market have scared investors, especially those nearing retirement. It is however, important for them to realize their time frame. Take a 55 year old who wants to retire at 60 for example. Their investment time horizon is not 5 years, but closer to 35 years because odds are, they'll live to 90. Looking at it from this point of view makes it much easier to stomach the volatility of the stock market.

Taking all these factors into consideration will greatly increase your success in developing an effective retirement plan. Whether it's in your immediate future or is still 5, 10 or 15 years away, it's time to lay the foundation for an income plan that will see you through retirement. Talk with your financial consultant today about building a plan that will help you convert your wealth into the retirement income you'll need to live comfortably in your golden years.