Some errors are more costly than others. With retirement planning, one or two mistakes could cause painful changes in your retirement plans. Here are some common mistakes:

  • Not considering long-term care needs. About half of us will spend time in a nursing home. While the average annual cost of long-term care insurance is $1,700, it will protect your other assets and provide for adequate care should the need arise.
  • Failing to consider the effects of inflation and taxes. Many retirees find that they are still in a high tax bracket after they retire. And inflation could rob them of their purchasing power.
  • Not saving enough in the years immediately before retirement. An all-out effort leading up to the final day of work can make a big difference in the size of your nest egg. Some people save a third of the final total in the last five years before retiring.
  • Making big loans to family and friends. These loans have a way of becoming gifts (not always, but often).
  • Overestimating how much you can withdraw from savings. Most advisors are comfortable with 3 to 5 percent, though some approve of 7 or 8 percent in the early retirement years when you are most active.
  • Underestimating life expectancy. Most planners now use 90 or 95 years as a longevity figure.
  • Making risky investments. If 7 or 8 percent fills your need, don't try for 17 or 18 percent.