Define Your Retirement Before You Set the Date

As you approach retirement, do you plan to work longer than your full retirement age? Before you decide on the date of your retirement, take some time to define the look of your retirement. Think about the intangible benefits you get from work, such as routine, camaraderie, a sense of fulfillment, and being needed. What will it take to stay engaged and energized once that's gone?

Having this picture in mind makes it easier to decide on your retirement date. As you do, avoid five mistakes rookie retirees often make:

1. Working longer than you need to—If you're financially ready to retire, you might think that an extra year will pad your earnings and give you more security. As you do your calculations remember that one more year of work is also one year closer to the inevitable deterioration of your mind and body.

2. Retiring debt without doing the math—In a perfect world, you'll retire debt-free. This is a sensible goal, but take care. When you retire and have less earned income, interest rates may be higher than they are today. Will you be able to qualify for a new loan if you should need one?

3. Being too frugal—Make sure you haven't set yourself up to have more money than time left to enjoy it. If traveling is important to you, will you have the eyes, ears, mind, and knees to enjoy the trips? Likewise, before you undertake expensive home improvements, make sure they're going to benefit you, not just some future owner.

4. Thinking you need to leave a lot to the kids—Your descendants will appreciate any money you leave them, but, if you live to your mid-to-late 80s, your children will be at least middle-aged and your grandchildren could be adults. Consider the value of giving them money now when they probably really need it and when you'll be able to watch them enjoy it.

5. Putting off Social Security benefits to age 70—Conventional wisdom says this is usually the best choice but think through the ramifications.

First, you must live to age 80 or so for the larger Social Security benefit to make up for all the postponed payments. Estimate how long you will live by visiting the Social Security Administration's Life Expectancy Calculator. Check out a few other online calculators to get an accurate picture.

Second, waiting to take Social Security means no monthly checks for the duration. Are you prepared for this change—after earning a regular paycheck for about 40 years? A Social Security check provides regular, predictable payments that help smooth your transition into retirement.

Third, unless you have other, sufficient income, living off savings instead of Social Security means having less money to leave your heirs, for your own emergencies, or to invest if the opportunity arises.

As you plan your retirement date, carefully consider your unique situation to plan a financially successful retirement.