CNBC Guest Blog

Published: Thursday, 15 Oct 2009 | 1:10 PM ET

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Retiring from ones employment can be a stressful time but it doesn’t have to be. Realize that it’s natural to be nervous, anxious and/or confused when you’re going through a major life change. Your decision to retire is causing you to step outside your comfort zone and is forcing you to make many new decisions and learn new things. Most importantly, remember that you only get one shot at retirement and you don’t want to make any mistakes. So here are some of the more common mistakes people make when retiring and how you can avoid them.

1. Listening to the wrong people – Everyone’s got an opinion about what you should do with your money nowadays. Be sure to find a retirement specialist, preferably one with 10 or more year’s experience. This is no time for amateur hour.

2. Not understanding the tax consequences of investments – Don’t try to know this area all by yourself. Every financial decision has a tax consequence. Be sure to have a trusted accountant or CPA in your corner who can show you how to minimize your taxes and keep more of what you make.

3. Choosing the wrong pension option – If you’re lucky enough to have a pension, don’t make this irrevocable decision by the seat of your pants. Crunch the numbers or hire someone to crunch the numbers for you to determine what the best payout strategy is for you. If you’re married, consider a joint life payout option so your spouse will continue receiving a monthly benefit when you die. If you’re married and take the highest single life option, make sure you have plenty of life insurance for your spouse as an alternative funding strategy.

4. Misunderstanding what Medicare & Social Security pay for – In the event of a long term care episode, the government is not going to take care of you unless you’re poor. Make sure you have done the proper planning and have secured long term care insurance, a Medicare supplement policy or have enough assets to pay your own way.

5. Thinking “risk” just involves losing principal – Losing money is one type of risk but there are many others such as longevity risk, interest rate risk, inflation risk, geopolitical risk, default risk, credit risk. How will you manage risk in retirement? If you are letting luck and guesswork form the foundation of your retirement security, you’re in for a bumpy ride.

Bill’s Bottom-line: When you know, and you know you know, confidence replaces fear. To learn more, download a FREE 30-page report, The 10 Biggest Retirement Mistakes People Make & How YOU Can Avoid Them at www.MyRetirementSuccess.com.

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Bill Losey, CFP®, America's Retirement Strategist®, coaches women and couples nationwide with their retirement planning and investment portfolios.  Bill is the author of Retire in a Weekend! The Baby Boomer’s Guide to Making Work Optional and he also publishes Retirement Intelligence®, a free weekly award-winning newsletter.
You can learn more at www.MyRetirementSuccess.com .

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