By Robert Brokamp and David Braze

You've spent your life saving, and now you're ready to start spending. That's right, Fool -- it's time to kiss the boss good-bye. Some call it retirement, but you call it "payday!"

You've already started moving your money around (after that refresher course on asset allocation). No surprises await (so you think) on the costs front (here's some brush-up reading, just to be sure).

But do not go hastily into that good life. You have a few important decisions to make before you head off to Bermuda. Here are some of the biggies.

Where will you live?

Your home is more than four walls and a roof. (Yes! We forgot the floor!) The home, especially when it's paid for, represents security. It's also a big investment -- probably one of your biggest. As such, it represents an asset from which you may obtain needed capital if and when that becomes necessary.

Longtime homeowners know that their homes have increased in value since their original purchase. Often, that equity represents a princely sum that, if accessed, could yield an even greater return invested elsewhere. One scenario would be to sell your current home, use the proceeds to purchase a lower-priced home, and invest the difference. You can sell your home and receive gains of up to $250,000 ($500,000 for a couple) totally tax-free, assuming you follow the rules.

Maybe you don't want the hassle of home ownership again. Instead, you plan to sell, invest the cash, and rent. Will that work? It could. It depends on how much rent you will pay in retirement. A home mortgage tends to be relatively stable through the years, whereas rent has a nasty habit of increasing every 12 months. If you can invest your money to pay for those ever-increasing rent payments, then a lease may be an option worth considering.

Another option frequently used by Rule Your Retirement members is selling their residence to their children, taking the tax savings, and then renting their home back.

Many retirees want the security of not having to pay rent or a mortgage. There is nothing wrong with that. When needed, you can still get at the equity tied up in your home through one of two ways in most states:

• A home equity loan (HEL) is nothing more than a loan secured by using your home as collateral. Repayment starts immediately, usually in the form of a monthly payment based on a 15-year amortization schedule. For emergency cash, a HEL is a good vehicle. As a means of regular income, it is not the route to take. If you need the loan as income, then chances are you can't repay it. Failure to repay the debt will result in a foreclosure on your home.
  
  
• A reverse mortgage is a means of receiving a regular, untaxed income as a loan against the equity you have in your home. The total loan amount is usually fixed, and may be paid as a lump sum or in monthly installments over a fixed period or for life. Unlike the HEL, though, this loan doesn't have to be repaid until you die or sell your home. Then you or your estate repays all loan proceeds with interest. Your legal obligation for repayment is limited to the value of the home at that time. If the home declines in value, you will never owe more than your equity in the home on its sale.

Should you go back to work?

You've retired from the rat race and you're enjoying the good life. You're sipping your Mai Tai and contemplating the mysteries of your navel. You're on the verge of developing that One True Theory of Lint. Suddenly, a wild thought intrudes on your meditations. Is it possible that you could (gasp!) re-enter the workforce? But why would you want to? Here are some possibilities:

• You want to feel more productive.
• You desire some "mad" money.
• You enjoy the personal contact with others.
• You want to turn your pastime into a full-time -- i.e., you want to turn your hobby into income.
• You need time away from your spouse.
• The stock market ate your nest egg.

Many retirees do work at least part-time. But what does it mean financially when they return to work?

The financial impact of a second career depends largely on the age at which you resume work. For those younger than age 62, a job serves to increase the ultimate benefit you'll receive when you take Social Security. In computing that benefit, the system looks at a person's entire working life. The computations are complicated and use the best 35 of the 40 highest years' earnings. If you have a lot of zero-income years, that will lessen your ultimate benefit.

Working after you've begun receiving Social Security might result in lower benefits, if you've not yet reached the Social Security "full retirement age" (65 and older, depending on when you were born). The amount of your benefit reduction will depend on your age and how much you make.

Finally, we can't forget about taxes (Uncle Sam won't let us). Social Security benefits received at any age become partially taxable once your income exceeds a certain level (the specific amount is adjusted annually).

The good thing about working after retirement (we know, it sounds like an oxymoron) is that you have other resources to fall back on, so you can go for job satisfaction first. Just recognize the impact such work has on your Social Security benefits. Your endeavors may increase what you get from the system -- or reduce the check you currently receive.

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