Considering that one may require at least a minimum of 80% (likely more) of their present income in retirement, the crucial missteps in terms of planning, saving and investing for retirement can quickly add up over time, lessening the chances to enjoy what should be the happiest stage of life; one’s golden years.

Here is a brief glance at the two top retirement planning mistakes:

1. Underestimating expenses and the overall cost of living during retirement.

Often, many individuals mistakenly believe or expect that their expenses will decrease during retirement when in actuality, their cost of living may either stay the same, only marginally decrease or more likely, increase. Long-term care and out-of-pocket health care costs are generally grossly underestimated and seldom figured in any future retirement scenario by many younger and even older workers.

Another key mistake is neglecting the fact that prices for essentials such as food and utilities can increase over time. Aside from fixed costs for necessities such as food, housing, insurance, out-of-pocket health care expenses, transportation and utilities, there are a whole range of variable costs which can be easily overlooked. Retirement is continually being redefined. More and more retirees are reinventing themselves, enthusiastically pursuing new careers or businesses ventures (of course, many may need to work part-time to supplement their income). For seniors who are in robust health, staying vibrant and active also means enjoying a variety of leisure hobbies and interests, all of which can greatly increase overall expenditures.

There may also be other financial goals. Some individuals may wish to set up trust funds for adult children and grandchildren or establish a charitable trust. Members of the “sandwich” generation may have to consider a wide range of personal and financial scenarios when planning for retirement. Number crunching takes on a whole new urgency. Working with a cash flow plan is essential for saving and investing for retirement. You will need to calculate your expenses and income from all sources in order to determine how successfully you are meeting your goals for saving and investing for retirement.

2. Poor asset allocation.

When it comes to retirement investing, there are many seemingly “small” but detrimental strategies that can over time diminish or in some cases, wipe out your investment.

Betting your retirement on the company can be a foolhardy strategy. It is amazing how many individuals still continue to hold the bulk of their retirement funds in company stock! The continued profitability and solvency of a company, no matter how illustrious and stalwart, is not a “guaranteed” given. Being excessively cautious, so risk averse that “investing” is limited to only low-yielding, fixed-income instruments and avoiding equities altogether, can greatly undermine the investment potential of your retirement funds. Equally detrimental is investing primarily for capital gains, recklessly chasing yield without any regard for safety. Investment duplication is another ineffective strategy. It can work to reduce your total rate of return and over the long-run erode the worth of your investment holdings.

It is prudent to review your retirement portfolio regularly to ensure that you have the right mix of investments for your stage of life, personal priorities and risk level.

Having A Tempered Approach

Planning for retirement is not a perfect science. A tempered investment approach is crucial. Everyone has a relationship with their money. Investment success is not the sole result of a “well-balanced” portfolio. It is, in large part, attributable to individual temperament and discipline. Haphazardly investing and focusing on short-term goals, trying to make up for lost ground by pursuing risky investments, not fully “maxing” out on contributions to tax-deferred retirement accounts, failing to become proactive with regard to establishing additional, independent investments and savings accounts, overestimating the future rate of return on retirement investments and holding an unrealistic, overtly rosy outlook or panicking and ceasing to contribute to an IRA or 401(k) during periods of extreme market gyrations are common mistakes shared by both younger and older investors. Another mistake is overly relying on an IRA and/or 401(k) for retirement income along with Social Security to make up for any shortfall.