En español | An AARP editor asked me recently, "At what point do we say to people: 'OK, you can panic now.' When will our financial advice — to stay the course — have to change?"

To which my response is: Advice from investment advisers has changed already. They've grown more conservative. When they say stay the course, they're talking about the new course. That means a laser focus on matching your expenses to income and savings, with investment considerations second.

See also: Is your financial future secure?

Transitioning into retirement will be easier if you let your savings build. — Photo by C.J. Burton

You cannot outsmart the future. Stocks usually rise in a presidential election year, but that's no guarantee. Some economists — including those at the respected Economic Cycle Research Institute — forecast a new recession in 2012, which could cut off the stock market at the knees. Doomsday prophets foresee hyperinflation, yet slack economies kill inflation and hold down interest rates, as we've recently seen. Europe might, or might not, prevent defaults.

A panic response? No one should invest based on predictions. Preparing for 2012 (and '13 and '14) does indeed demand a panic response — but not of the investing kind. The panics we think about, when stock markets fall, could be titled "Omigod, sell everything." The more critical wake-up call, especially for people still working or younger retirees, is "Omigod, I'm not saving enough" or "Omigod, my expenses are too high." Those are the action items that matter most.

The story varies, depending on your age and work status. If you're at least 65 and fully retired, you may be in decent shape. You've already faced the need to balance your expenses with your reduced, post-paycheck income. Social Security benefits will rise 3.6 percent in 2012, and inflation-linked pensions will rise, too. Between 2007 and 2010, median household income for people 65 and up increased by 5.5 percent a year, while income for every other age group fell. Only 9 percent of people 65-plus lived in poverty in 2010, compared with 13.7 percent for those 18 to 64.

Careful budgeting pays. A study led by MIT economist James Poterba found that only 18 percent of people with retirement accounts draw out money in any year between ages 60 and 69. They're covering their expenses with other resources and letting savings build.

The "Omigod" group includes workers 55-plus who are not in decent shape. Many took a hit in the last recession. Many who lost their jobs were unemployed almost three times longer than they would have been in better times, according to the Government Accountability Office. An AARP survey found that 25 percent of 50-plus adults exhausted their savings between 2007 and 2010.

Next: Prepare ahead of time for your transition to retirement. >>