Five Mistakes to Avoid Near Retirement

1. Trying to make up for lost time - if you have seen your retirement portfolio reduced and feel tempted to take unnecessary risk to make up for losses, resist. With the recent surge in the stock market you may think that is time to invest aggressively to make up for lost time, right? Keep in mind that a more aggressive allocation gives you the potential for higher returns, lower returns and negative returns. An agrresive allocation does not guarantee that you will meet your retirement goals, it could help, but it's far from a sure thing. Before increasing investment risk, consider options that will deliver a more reliable outcome: like working longer, spending less
and saving more.

2. Avoiding tax planning - One of the best investments you can make is tax planning. Meet with your tax professional to design projected tax liabilities during your retirement years and make decisions that can help you reduce the taxes. Developing a solid retirement planning now
can make a big difference down the road.

3. Claiming Social Security Without a Plan - Many Americans are potentially leaving dollars on the table due to poor planning when claiming their social security funds. A good financial advisor can help you determine when is the right time and how to maximize your benefits. While some people are simply uninformed, others are dangerously misled by the “conventional wisdom” surrounding Social Security.

Retirees often apply for Social Security benefits early then find themselves regretting the reduced checks for the rest of their lives. There’s a financial penalty for claiming Social Security benefits between age 62 and your full retirement age (66 for people born between 1943 and 1954, between 66 and 67 for those born between 1955 and 1959 and 67 for those born in 1960 and later).

4.Overspending - Many times you may feel tempted to buy that extra toy. As the economy improves you may feel that you need to show it (aka "wealth effect") and it can be a dangerous thing. Increases in your retirement portfolio because the market did well last year doesn't
mean there's now room for the latest model car — unless of course that was part of your original plan. 

Many people fail to adequately address increased longevity. The reality is that we are living longer than ever. Outliving ones' assets should be a primary concern when envisioning
the type of retirement lifestyle that one desires, and then to plan accordingly.

5. Assuming Medicare Covers all Your Health Care Costs - Assuming that you wont have health care expenses during your retirement years because you have Medicare can lead you to a rude awakening. You should estimate that Medicare will cover about 50% of your health care expenses in retirement. Also, you should not overlook the possibility for long-term care. And I'm not talking just insurance policies, though these may be important depending on your financial situation and disposition of assets. Discussions among family members are especially important ahead of time, because the emotional and financial hardships of a long-term illness can be devastating.