Published: Tuesday, 12 May 2009 | 10:44 AM ET

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The rules of money change in retirement. Julie Casserly, CFP, founder and president of JMC Wealth Management and author of The Emotion Behind Money, has three things you should NOT do when you retire.

1. Never pull out more than 5 percent of your retirement assets on an annual basis. If you do, you are likely to outlive your money. In recessionary times, she advises her clients to take out no more than 3.6 percent of investable assets.

2. With no earned household income, neither you nor your spouse can contribute to a Roth or Traditional IRA. Lots of retirees want to continue to keep cintributing but without earned income, you are not allowed.

3. Don’t attempt to avoid income tax on your social security income. People are still shocked to learn that they are taxed on social security, assuming they make more than $25,000 (single) or $32,000 (couple) per year. And if you make over $44,000 as a married couple, a full 85 percent of that social security income is taxable. In addition, 401(k) distributions are taxed so make sure you take it all into account in your planning.

The most important thing for retirees, of course, is creating a life to be passionate about, Casserly says. She recalls the story of a 72-year-old client who decided to get his law degree after he retired and ended up practicing law until he was 84. A little planning goes a long way.

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