Five Biggest Mistakes Retirees Make

old woman and man working - mistakes retirees makeAnybody who thought retirement was going to be easy is wrong. Living happily in good health with enough money to pay the bills is no slam-dunk in these financially challenging times.

Here are five critical mistakes that retirees make as they prepare to shut the door on a full-time worklife.1. Retiring to Poverty. Unless you crave a job as a greeter at Walmart or you intend to share a single-wide with a couple of other people, working harder and saving more is the only way to salvage your retirement. Most of us are hanging up our work boots without nearly enough money to carry us through until the end. About 33% of people older than 62 are living on Social Security alone. Social Security says the average monthly payment in 2010 was $1,164. That's $13,968 a year. The federal poverty guideline for a single person last year was $10,830. For two people it was $14,500. If you don't have savings, a pension or both, better plan on working until you drop or learning to love an all-kibble diet.

2. Spending Too Much Time in the Rocking Chair. Sitting on your butt can kill you or at least reduce your life expectancy by an average of six years, Dutch researchers conclude. But many people retire from physical activity when they retire from work. Of people age 50 and older, 46% don't exercise at all, according to a government report in the journal Preventing Chronic Disease.

3. Neglecting Friends and Family. "Help me. I've fallen and I can't get up" is a tired commercial, but for some people, it's reality. Living without a network of friends and family is a real threat to retirement well being. A study published by the National Institutes of Health showed that 16% of people older than 65 were socially isolated. High percentages were plagued with depression, memory loss, overall poor health, a general inability to manage the basics of daily living, and a fear of falling -- and dying -- alone.

4. Thinking Your Former Employer or an Investment Company Has Your Back. Turning management of your affairs over to somebody else and hoping they get it right without watching carefully and understanding what they're saying and doing is a recipe for disaster. Sometimes they're honest; sometimes they're not. And once in awhile they get caught. The National Association of Securities Dealers (NASD) three years ago fined CitiGroup Global Markets $3 million and demanded that it pay $12.5 million more in restitution for allowing its brokers to hold sales presentations where they told 55-year-old employees of BellSouth -- who the company wanted to take early retirement -- to expect that for 30 years they could earn approximately 12% annually on their investments, while withdrawing 9% annually. More than 1,000 employees believed them -- and lost their shirts.

5. Betting Against Dementia or Disability. About 13% of people over the age of 65 currently have dementia, the National Institutes of Health estimates. By 2050, there will be nearly 16 million people suffering from the condition. That's just a part of the problem. The National Clearinghouse for Long-term Care Information, another federal program, believes that 70% of people over 65 will need long-term care at some time in their lives. The average cost in the United States for a semi-private room in a nursing home is $198 a day. The average stay is a little less than three years. Do the math and you get $217,000 -- and it's not covered by Medicare. The only way Medicaid will pick up the cost is if you've spent all but $2,000 of your money, including -- in many cases -- selling your house. Even if you don't care about yourself, taking the ostrich approach to solving this problem before it happens can leave your spouse in a world of trouble.
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