Most people can retire rich. I am convinced of this. And it’s not a complicated process either. In fact, it’s very simple…not easy…but simple.

Having said that, if you want to retire rich, (assuming you’re not already rich), you’re going to have get out of your comfort zone and do things differently. You’re going to have to spend time and work hard. You might learn that you’re going to have to start a side business or get a different day job. But I guarantee if you follow these steps, you will absolutely positively retire rich.

Here are the steps:

1. Know Where You Are

Very few people know where they are financially. They don’t know how much they spend on average each month. They don’t know how much they can and should save. They don’t know how much their investments are worth and they don’t know if they are investing correctly. You will never retire rich if you can’t answer these questions at the very least. The good news is, if you are willing to get out of your comfort zone you can easily get the answers you need. Do you know how much money is needed to retire rich. The answer depends on your situation. The best way to get a handle on this is to first know how much you spend.

You can start tracking your spending by using an inexpensive software package, or you can even create your own spreadsheet. It doesn’t matter how you do it. What matters is that you do it and do it religiously. This is key – and you will never ever be rich and financially independent unless and until you know what you spend on average each month.

Important side note You absolutely dont have to be wealthy in order to live richly.  You might be surprised to discover how you can live rich on a shoe string budget . 

With respect to your investments, create a balance sheet that lists them all and tallies the total value. If you have holdings all over town, consolidate whenever possible. There is no reason on earth to have one IRA at Vanguard, another at T Rowe Price and a third at the local bank. You can consolidate all your holdings by transferring your accounts to one custodian like TD Ameritrade or Fidelity – I can’t stand Schwab because they are so damn expensive, so be a good Pilgrim and don’t open your accounts there.

2. Set Your Target

Once you know what you spend and what you have, you have to figure where you want to be. In order to answer that, you have to define what “rich” means to you. If you ask me, being “rich” means being able to spend your day the way you want to – not the way Mr. Man tells you. So figure out what “rich” means to you. Don’t worry because you get to change the definition as you go.

In order to get a clear picture of your target, think about what kind of lifestyle you want to have and what it will cost. This is not a question of assets – it’s an issue of income and what size assets you’ll need to create that income. Don’t think, “Oh…I need $1,000,000 to retire.” Ask yourself how much income you’ll need to have the “rich” lifestyle you want.

Once you are clear on this number, it’s time to run a mini-financial plan. The plan you run should allow you to first see where you’re going to end up if you continue on your current path. Then it should have the flexibility to show you what your future looks like if you make changes. It should ultimately show you what you need to do differently in order to achieve your goals.

3. Make the Changes

In most cases, you’re going to have to save more now, earn more now or spend less in retirement – or a combination of the three.

Tying it all together:

If you continue to track your spending, you should be able to find ways to cut spending. This is going to be a huge boost no matter how close or far away you are from retirement.

By tracking your investments and educating yourself, you can see if you are making the best investments for your retirement and future.

And by running a mini-plan and updating it every year, you can see if you are on track or if you need to make changes in order to retire rich.

Are you going to stay or retire rich? How do you know?