What mistakes?  You did it all right getting into retirement, you certainly don’t want to be told what to do once you reach it, right?

Well, unfortunately you still have to use all that planning knowledge in retirement that you did when you’re building your retirement funds, so you don’t have to go back to work.  Here are the number one mistakes that all retirees need to be mindful of when they do their hard-stop to working.

1. Do not change lifestyle after retirement.  Once in retirement, you must live on a fixed budgeted income and lower your spending.  At retirement, you really should have everything you need with no need for wasteful consumer spending.   All big expenses should have been done when you were still working.
2. Do not move investments into a more conservative portfolio.  While risk is different for all retirees, it goes without saying that you must divide your investments (assets and securities) into more conservative vehicles that can provide long-term growth while limiting market volatility.
3. Spend too much money too soon.  Please read the “Honeymoon Stage” under retirement.

You always want to avoid the temptation to withdraw big chunks out of your retirement savings at one time and it is always advisable you have a good financial partner to provide advice as you age.

1. Cashing out Pensions.  This is something a lot of people consider, especially when they see the high pension amounts they can get their hands on.  But you must be careful, these funds are for your long-term retirement living and should not be used so you can retire earlier or payoff your debt.
2. Applying for social security too early.  Just because you are eligible to apply for social security at age 62, doesn’t mean you should.  If you don’t really need the funds, remember that you can get 25% more by waiting until you are 66 years old.  And if you wait until you are 70, you will get approximately 32% more than at age 62.

Christine’s Tip:

 The number one silent-killer to a retirement portfolio are the fees.  Transactional fees are charged with every investment transaction.  This is often the case when you buy fixed income investments such as bonds.  A fee is charged when you purchase the bond and then again when you sell it.  There aren’t many advisors that still do transactional fee structures when buying securities.  That was the old “stockbroker style” of buying and selling stocks on a monthly basis to generate revenue not only for the client but also the broker.  Most advisors today lack the expertise to execute this style of investing properly. 

We used to call this method the “pump & dump,” which was basically how a broker would make an income, moving stock around and charging a transaction fee every time.  Nowadays advisors want to put you in a fee-based plan, with a fixed monthly fee designed to offer more protection for the clients along with ensuring a consistent revenue stream for the advisor and the brokerage firm.  Just make sure you are okay with these fees, since they will be due regardless of a gain or loss on your portfolio.