After years of planning and saving diligently, reaching retirement is a milestone that’s worth celebrating. But it’s also important that you have a strategy in place for how you’re going to spend your money once you get there.

To help ensure you can retire securely and confidently, here are four common financial mistakes to avoid in retirement.

MISTAKE NO. 1: MAINTAINING THE SAME LEVEL OF RISK

In the years leading up to retirement, you saved and invested with the goal of growing your assets. But as you transition into this new phase of life, you’ll want to re-evaluate that strategy and focus on how to make your money last for decades.

While you still need some investments to keep up with inflation, you may not want to take on as much investment risk as you did during your working years. So reassess your tolerance for risk and adjust your investments accordingly.

MISTAKE NO. 2: NOT MAXIMIZING YOUR INCOME

As you start to withdraw from your retirement accounts, the last thing you want to do is pull money from your investments when the market is experiencing a downturn. But you can minimize that risk by having multiple sources of income to draw from. The more options you have, the better positioned you’ll be to withstand market losses and minimize your taxes.

So in addition to your investments, aim to have assets that are not subject to daily market fluctuations, such as a cash reserve, an income annuity or permanent life insurance cash value. And when it comes to paying taxes, the best way to give yourself flexibility is to have a mix of accounts that will be taxed, such as a traditional 401(k), as well as accounts that won’t be taxed when you withdraw from them, such as a Roth 401(k) or Roth IRA.

MISTAKE NO. 3: SPENDING TOO MUCH OR TOO LITTLE

When you stop working, it can take time to not only adjust to your new way of life, but also to make the most of your savings. For some people, that can mean getting carried away with vacations, spoiling the grandkids or overindulging in a newfound hobby. Others may find it hard to enjoy their savings because they’re worried they will run out of money or won’t have anything left to leave the kids or grandkids.

Ultimately, your goal should be to do the things you want with the confidence that you’ll have the funds to get you through retirement. To do that, start by creating a spending plan that includes estimated costs for must-haves as well as a prioritized list of nice-to-haves. Be realistic, as people often underestimate the cost of health care in retirement, the impact of taking Social Security early, or even how much it costs to downsize.

Once you’ve calculated the cost of your essential expenses, make sure your guaranteed income from Social Security, a pension and/or an annuity will be enough to cover them. Once you have a plan for these fixed costs, you’ll be more inclined to spend money on your nice-to-haves. The same goes for if you want to leave a legacy: Once you’ve built it into your financial plan, you’ll have the freedom to spend money on yourself.

MISTAKE NO. 4: LENDING MONEY WITHOUT A PLAN

Given the finite number of financial resources you will likely have in retirement, it’s important to tread carefully if you’re thinking about lending money to family. If you decide to give a loved one a loan, be sure it’s money you can afford to live without (in case you don’t get paid back) and get the arrangement in writing. And be sure to clear it with your partner to ensure it’s a decision you’re both comfortable with.

No investment strategy can guarantee a profit or protect against loss.

Distributions may be subject to ordinary income tax and may be subject to a 10% IRS early withdrawal penalty if taken before age 59 ½.

This publication is not intended as legal or tax advice. Financial Representatives do not give legal or tax advice. Taxpayers should seek advice based on their particular circumstances from an independent tax advisor.

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