Retirement Planning: 5 Common Mistakes

4. Not getting professional advice.

Preparing for retirement is all about accumulation — saving and investment performance are your primary concerns. But in retirement, your primary goal becomes much more complex: to continue to grow the pie while simultaneously eating it. Going without a competent adviser at this stage could be a big mistake.

5. Fumbling your distribution strategy. Improperly converting your savings into an income stream, taking too much too soon from the wrong account or in the wrong markets could be the difference between retirement bliss and retirement blunder.

A distribution strategy typically occurs in two phases. Phase 1 involves moving the money from preretirement accounts, for example, your 401(k), to postretirement accounts. Phase 2 involves creating an income stream from those postretirement accounts.

The ideal time to begin working through your distribution strategy is a year or so before retirement. You should be thinking about how much you need, where it's going to come from, and whether your nest egg is up to the task.

When you retire, your portfolio takes over the job that the payroll department handled during your working years, namely to send you a paycheck every month. If you retire when you're 65 and live until you're 85, it needs to cut you 240 monthly checks. There are a host of variables that will affect its ability to do that, such as the distribution rate you choose, investment returns, inflation, how long you live — and good old-fashioned luck.

Some things you can control and others you can't, but having a well-conceived, sustainable distribution strategy will help ensure that your money lasts as long as you do.

Joseph Hearn is the author of The Bell Lap: The 8 Biggest Mistakes to Avoid as You Approach Retirement.

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