The safer move, most financial planners say, is to devote a healthy portion of your portfolio to stocks.
"Retirees tend to be too willing to sacrifice future safety for incremental yields today," says Bob Wiedemer, managing director of Absolute Investment Management, of Bethesda, Md.
Inflation's effect is real, and ravaging over time. To illustrate its effect to his clients, financial adviser Allan Flader of RBC Wealth Management in Phoenix reminds them of the change in the price of a stamp during the last three decades - the length of many retirements nowadays. The cost of mailing a letter has gone from 18 cents in 1981 to 34 cents a decade ago to 45 cents today.
The fix: A rough guideline for asset allocation is to own a percentage in stocks equal to 110 or 120 minus your age. In other words, a 70-year-old would have 40 percent or 50 percent of her portfolio in stocks.
Putting off planning. This is not just a matter of missing out on investment opportunities or tax advantages. It can get you in trouble later, when you are no longer at the top of your game mentally.
The fix: Prepare thorough financial and estate plans and discuss future aging-related scenarios with an adviser.
Bailing out the kids. Kelley Long, a personal-finance expert with the National CPA Financial Literacy Commission, says too many retirees are overly concerned about leaving a legacy, "when in fact their children would trade their inheritance for the knowledge that their parents were living out their days in comfort."
The fix: Put your financial needs in retirement first. Make sure you know how much you can safely spend from your savings each year.
Paying too much in taxes. Retirees usually are in lower tax brackets than when they worked. But they often fail to adjust accordingly.
