4 retirement planning mistakes you may be making

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(MoneyWatch) If you're a boomer approaching retirement who's been keeping abreast of retirement planning issues, you're probably already aware of several common retirement planning mistakes that many people make, such as starting Social Security too early, drawing down your retirement savings too rapidly, or panicking and selling your stock investments when the market tanks. If these sound familiar to you, pat yourself on the back since you've been keeping an eye on your retirement money ball.

But planning for a retirement and rest of life that could easily last 20 years or more is an ambitious undertaking, and you'll need to keep your eye on many different balls, not just the money ball. So let's take a look at some common retirement planning mistakes that don't directly involve your money.

Mistake #1: Maintaining the status quo at work
Many boomers are beginning to accept that they'll need to postpone their retirementbecause they don't have sufficient financial resources available to fully retire in their early to mid 60s. And most likely they're right: The majority of boomers don't have sufficient 401(k) balances or pension income to retire any time soon.

But that doesn't mean that you should simply suck it up and continue slogging away at the same old job for a few more years. One of the biggest threats to retirement for people currently in their 50s and 60s is the loss of their job. As a result, you should be doing everything in your power to secure that stream of wage income for many more years to come. Moves you can make include:

- Taking on new responsibilities
- Learning new skills
- Signing up for new training courses
- Obtaining new credentials or updating your current credentials, and/or
- Nurturing your network of both internal and external business contacts.

And don't overlook other actions you can take that can make your job and your life more enjoyable, thereby postponing boredom or frustration that can diminish your job performance. This can include:

- Easing your commute by moving closer to work, taking public transportation, or car-pooling
- Taking all your vacation time (and maybe a little more), either all at once or little by little so you can enjoy time off from your job, or
- Pursuing activities and hobbies you've always wanted to do in your spare time.

Another strategy to consider is working part time while you delay full retirement. It may be that all you need to do is to work enough to cover your living expenses, thereby allowing the continued growth of all your other retirement resources, such as Social Security, retirement savings, and a pension if you have one. By working just part time, you'll still have more time for yourself -- compared with working 40-plus hours per week -- so you'll be able to realize some of the advantages of being retired. Some advisors call this "practice retirement," and it's an idea that deserves your consideration.

Mistake #2: Complacency with living expenses
According to a recent survey by the Society of Actuaries, reducing your living expenses is the number-one financial coping strategy named by retirees, yet many people wait until their backs are to the wall before taking a hard look at their living expenses. Instead of waiting until you have no choice, now is the time to consider downsizing your home, managing with just one car, doing all you can to cut back on your monthly utility bills, and postponing major, discretionary purchases, like a new flat screen TV.

Now is also the time to consider whether you should move to a less expensive area of the country or share housingto dramatically cut your living expenses. Now is also the time to consider what is "just enough" to meet your needs and make you happy.

Mistake #3: Ignoring your health
By now I'm sure you've heard that you need to keep your weight at healthy levels and get more exercise. But most people aren't taking this advice, when you consider that about two-thirds of Americans are considered overweight, with a body-mass index (BMI) of 25 or higher; one third are considered obese with a BMI of 30 or higher.

A number of studies have shown that a higher BMI is associated with increased health care costs. Compared to the healthy BMI group, the overweight BMI group had higher annual medical costs that ranged from a few hundred dollars per year to more than $2,000 per year. And there were similar differences when it came to comparing the obese BMI group to the overweight BMI group. That's money that's flying right out of your pocket, even if you're covered by medical insurance.

Given the skyrocketing costs of Medicare and employer-sponsored medical plans, we can expect to see more wellness programs and incentives for people who take care of their health. Most likely we'll also see more cost-shifting from the government and employers to individuals. In order to manage my retirement better, I'm doing everything in my power now to reduce the odds of needing expensive medical care later. Not only will I save money, but I'll also be able to enjoy life more and most likely live longer (although that could take more retirement savings - a result I'll gladly accept).

Mistake #4: Spending too much on your kids
We all want the best for our children, but is it really the best thing for them if you help them out financially and sacrifice your financial security in the process? After all, this could result in the need for you to move in with your kids later on when you run out of money.

Do your kids really need an expensive degree from a private university that doesn't have good career prospects? Many parents have taught their children to pursue their happiness at all costs, but later on, your kids (and you) might not be too happy if your children are unemployable. Help them be prudent in shopping for their education and selecting a course of study that has good employment prospects.

Or, do you have adult kids who need to move back in with you? That's OK if they're truly in need, but make it win-win situation so you don't suffer financially. Have them contribute to food and utility bills, and help with necessary household upkeep.

5 biggest retirement planning mistakes
Delaying retirement? Here's how to make it work
The secret formula that will make, or break your retirement
How to balance spending on your kids vs. saving for retirement

If you take steps to avoid these lifestyle retirement planning mistakes, you -- and your spouse and children -- will be grateful when you make it to your eighties, still walking down the road of a healthy and prosperous retirement.

  • Steve Vernon On Twitter»

    View all articles by Steve Vernon on CBS MoneyWatch»
    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

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