Retirement Mistakes

What do you do when you hear the dreaded question, "Are you prepared for retirement?"

If you're like most people, you quickly change the subject, according to Phyllis Garratt, a certified financial planner with Meritas Wealth Management in Larkspur, California. "People are so fearful they don't even want to think about it, but not doing anything is the worst mistake you can make." Anxiety about retirement is at a record high, Garratt says, fueled by the setbacks most of us have experienced at the hands of a stalled-out economy.

Consider these facts: With only 15 percent of today's employees entitled to a pension, compared with almost 40 percent in 1980, the vast majority of us will rely on a combination of Social Security and savings for our retirement. Yet savings are not only hard to come by, they're also multiplying at much slower rates. The Standard & Poor 500 -- a good indicator of the overall stock market -- has returned just 4 percent over the past 10 years.

So what to do? Prepare, prepare, prepare if you have time, says Garratt -- and make some fast, smart adjustments if you don't. Here are the 10 biggest retirement mistakes, and how to avoid or fix them.

Retirement mistake #1: Succumbing to the post-retirement spending spike

This comes as a big surprise to many retirees -- they spend more, not less, in the first few years after retirement. "We call it deferred spending, or the 'Whee, I'm free' factor," says retiree Ellen Gerson of Florida. "We see all these folks retire and start doing all the things they were dying to do, from traveling to golfing to fixing up their houses. A year or two later, they look over their budgets and they've gone way over."

How to fix: Make a budget based on long-term planning, and stick to it. If possible, anticipate travel and other retirement-related expenses and build them into your budget. Then track your spending carefully to see which categories go up and which go down. Are you eating out more, or less? Look for ways to balance things out now that you have more free time. If new hobbies are costing you extra in supplies, for example, maybe you can eat out less and cut food costs.