5 Biggest Retirement Planning Mistakes

Boomers already faced significant retirement challenges before getting clobbered by the recent stock market volatility. The possibility of another recession and the political gridlock over the federal debt only add to the uncertainty. More than ever, you will need to make every dollar count when it comes to planning for retirement -- once you are in your 50s or 60s, there isn't much margin for error.

Here five common retirement planning mistakes and a few tips for avoiding them. Be forewared: There aren't easy answers. It will take time to navigate an effective course of action. The end result, however, will be peace of mind that you're doing everything possible in a tough environment.

Given the market decline in the past three months, you might be tempted to make retirement planning mistake #1: running for shelter and moving all your stock investments into "safe" fixed investments. Even worse, you may decide to stop contributing to your 401(k), telling yourself "What's the use if my accounts just plummet?" Those would both be bad moves. A recent study showed the highest average account balances were earned by investors who stayed the course during the 2008 - 2009 downturn -- that is, investors who maintained their equity allocation and continued contributing to their 401(k)s. Another study showed that target date funds worked well at helping investors avoid making rash moves during the downturn.

Your best investing strategy right now? As advocated by fellow CBS MoneyWatch bloggers Allan Roth and Larry Swedroe, decide on an asset allocation between stocks and bonds that's appropriate for you, ignore the scary headlines, and stick to your strategies during the tough times. Find some way to overcome your fear when the market goes down. After all, you're not just investing for the next year or two -- you're investing for the next 20 to 30 years.

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[cedaredge]

People are gonna do what they're gonna do Steve Vernon. So just shut your mouth!

[anneable]

"gonna"?? When did that dumb word become acceptable? I'm GOING to start telling like it is.

[ntnoClone]

Stay the course - Don't draw down too soon or too much - don't do not plan, and don't get fat -- this is the best they can come up with? Another fluff piece to fill a white place that would have been worth a heck of lot more if just left alone.

[kevjustice]

retirement option: free rent, free food, free medical, free utilities, free everything. it's the prison plan-lol. some people have committed crimes then turned themselves into police to get medical since they had no ins and had big health problems. radical plan but at a last resort an option.

[tudognight]

We are all going to die.....that is a fact. When your retirement means you contribute nothing to society, you are already dead. Most seniors give the most last thing they have...their time. Some are selfish and self serving....but they were llke that in their youth. Sometimes we can only share our advise that we hold like gold....we no longer have gold...it is all we have. If you gain from it, that is good. Remember, our minds will go away like our lives...pick with care from our lives.

[Transatlantique]

One of them is letting the people at Edward Jones tell you that your inheritance is your retirement when you don't have a job let alone a career. Also, when those same people tell you not to buy Apple at $12 a share in 2002, which would have saved a majority of that inheritance from the bear markets that followed. Also, when those same people tell you to never sell what securities you have even though you could have realised a $60,000 profit, only to watch that profit evaporate, and never return. The other mistake is to let that happen twice and not learn from your first mistake that the people at Edward Jones are nothing but con artists and sales people who have no one's interest at heart except their own. Manage your own money, and listen to your instincts tell you what to do without the noise of those who have only profit in mind. At least then, you will only have yourself to blame. I suppose I could blame myself for listening to the idiot at Edward Jones, but they lull the most unsuspecting beginning investors with promises and hopes that never come to pass. They are predators at best.

[oldnassau67]

Financial plans and diet pills: equally worthless. Retire to a no income tax state, buy 5-6% A rated, or insured, munis. You'll know exactly your income. Living within it is your responsibility.

[ntnoClone]

A 5 to 6% muni, A rated and insured - really where does sone get those?

[Napeequa]

All the experts say "stay the course, stay the course . .". But these are not ordinary times. The Euro is in trouble, the "super committee" is still unproductive, the deficit continues to grow so fast. The basic "stay the course Econ-101 approach" is the mantra of robotic advisers. Agree with above post: minimize debt, cost of living, retire early. But eat healthy, stay active, enjoy making it last.

[tomford429]

Buy and hold, keep working and contributing, delay and minimize withdraws...does not sound like a retirement plan. It sounds like a plan to keep the money flowing in, rather than out for people making money off of the contributions. The best advise is to minimize debt, reduce your cost of living, retire early, and die broke.