Poor retirement planning can easily shortchange your prospects for a comfortable rest of your life.
Gerald Wernette, director of retirement plan consulting services at Rehmann, a company that caters to small businesses and individuals, says he has identified four issues that can turn the retirement experience upside down if people aren't careful.
Failure to pay attention. "We see participants change jobs and leave $5,000, $10,000, $15,000 sitting in a 401(k) account. They move and don't leave a forwarding address. I get pretty amazed. I personally would never lose track of that much money," Wernette says.
Failure to define retirement as including work. "Retirement shouldn't be about having a pile of money and sitting around doing nothing," Wernette says. He urges people to plan for a full and active life that includes a way to earn some additional income. "If you enjoy history, get a job giving tours at a historical site. If you've always been a do-it-yourselfer, work a few hours a week at a hardware store. ... A job like this will take some of the pressure off your savings, even if the pay isn't high," he says.
Failure to plan for the unexpected. One of Wernette's clients -- a man in his 50s -- went out to his driveway to brush the snow off his car, had a heart attack and dropped dead. His wife panicked and, without consulting anyone, made some poor financial decisions that will affect how financially well off she'll be for the rest of her life. "You have to be prepared and plan for the worst, because it could happen," Wernette says.
Failure to look at the big picture. You reach 62. Your 401(k) looks healthy, and you announce your retirement. "Not so fast," Wernette says. Before you give your notice, he recommends a thorough review of your situation, your assets and your expenses, including your biggest expenses: housing and health care. "You need to consider personal assets, insurance, pensions, 401(k)s, IRAs and whether you're maximizing your Social Security. "Line all that stuff up and then decide whether you're really ready to retire."