His advice? Project your retirement living expenses (ideally before you quit working) so you know how much you’ll need to save and what allocation of stocksand bonds is appropriate for you. In other words, start with the savings goal, and adjust your asset allocation accordingly.
It depends on your savings and appetite for risk, of course, but most retirees should have no more than 20 percent to 30 percent of their portfolio earmarked for fixed income, says Hammond.
Too Much Plastic
It’s easy to get in over your head when it comes to credit-card debt, and retirees are no exception.
According to New York-based research group Demos, those 65 and older from low- and middle-income households carried average credit card debt of $9,283 in 2012, the highest debt load of any age group in the survey.
Since 2008, seniors reduced their credit card debt by 6 percent, but here again, that reflects the smallest decline of all age groups, according to the survey. During the same four-year period, those ages 25 to 34 reduced their balances by nearly 51 percent.
“Seniors rely on their investments and money from their 401(k)s, and with the financial crash that resource is not as available as it has been,” says Amy Traub, senior policy analyst at Demos. “Hence, we haven’t seen the large decline in credit card debt among seniors that we’ve seen among other age groups.”
Setzfand notes many retirees use credit cards to pay for basic necessities when their income from Social Security, annuities, and other sources can’t keep up.
“They’re putting medical bills on their card and we see a growing trend in that area,” she says. “It ends up being a major cause of default and eventually bankruptcy.”
Too Much for the Kids
Parents all want the best for their children. But you can do serious harm to your own financial security — not to mention your credit score — when you become the bank of mom and dad (or grandma and grandpa).
Hammond says that happens all too often in this economy, as adult children move back in with their retired parents after losing a job, or ask them to co-sign for a mortgage loan amid tighter lending restrictions.
“Parents want their kids to have it better than they did, but that creates a lot of problems,” says Hammond. “Whether they co-sign for a loan or sacrifice their own retirement savings to send their kids to college, you have to be careful that you don’t put yourself in the position of running out of money.”
Remember, he says, your kids and grandkids can get a loan for college, and if they can’t qualify for a home or car on their own, they probably shouldn’t buy it to begin with.
Allan Katz, a certified financial planner and president of Comprehensive Wealth Management Group in Staten Island, N.Y., says many retirees also make the critical mistake of failing to factor inflation into their projections.
According to the Bureau of Labor Statistics, the annual inflation rate has averaged roughly 3 percent per year over the last 30 years.
During that same stretch, the Consumer Price Index, which measures the change in the price of goods and services paid by U.S. households, climbed 142 percent.