There’s plenty to worry about when planning for retirement, from saving enough money to making sure to choose the right investments.

But a Kiplinger report points out that focusing on such narrow goals can boobytrap a person's retirement in other ways that can cause big problems.

Focusing only on saving, or on the returns from the investments in a retirement account, can leave retirement savers exposed to problems that arise from other aspects of planning for retirement.

Being focused on the investing angle, to the exclusion of nearly everything else, will leave your employees (and you?) with holes in their plan through which they could drive an armored car. Actually, they might have to do that as a job postretirement if all they've paid attention to is the rate of return on investments.

But don’t feel too bad. According to Kiplinger, the five risks listed below are, after all, hidden, which means many savers don't consider them when planning for retirement.

So lest you or your employees prepare for retirement with blind spots intact, here are the hidden risks Kiplinger says to beware of:

5. Living longer than planned.

This one’s a good thing and a bad thing at the same time.

After all, just about everybody wants to live longer, but if you find yourself outliving the money you have to care for yourself, that’s definitely a problem.

If you underestimate how long a retirement you’re preparing for, you could come up very short, and that would definitely be a bad thing. When you’re working on your retirement plan, remember that based on gender and birthdate, most online tools will put your life expectancy somewhere between 85 or 88 years old.

But those are just averages, the report reminds, and according to data compiled by the Social Security Administration, about one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past 95.

So plan optimistically, for life expectancy plus a minimum of five years. You could just plan till at least age 95 and save accordingly. And don’t forget to update, or have a professional update, your plan every year so that it’s monitored on a regular basis.

4. Taxes in retirement.

Okay, so this one’s not an optimistic kind of planning; in fact, you should err on the side of caution and be pessimistic about how much in taxes you’ll have to pay once you retire.

Tax preparation, the report warns, is not tax planning. The former is what you do for the current year, while the latter prepares you for years to come.

You probably never really thought about the fact that your 401(k) or 403(b) will be taxed as ordinary income once you start making withdrawals. Roths, on the other hand, are not.

You should have multiple “buckets” of retirement income set up: taxable, tax-deferred, income tax-free/estate tax-free, and income tax-free/estate taxable.

Then you, or an advisor, should plan out how much, and when, to withdraw from each one to keep your tax burden at a minimum—especially in light of the new tax law.

3. Lifestyle expectations.

Some people survive on as little as possible during retirement out of fear that they’ll run out of money.

Others spend like crazy, failing to realize how fast the money will run out if they spend down their nest egg as taxes and inflation eat away at their money’s spending power.

If you don’t plan out what you intend to do in retirement, you won’t have a decent idea of what it will cost you. Know what’s essential to your happiness and well-being in retirement, and give them priority—and know which things you can classify as “optional” so that you can economize on them and still be happy.

After all, if you know that a Caribbean cruise is a luxury to treat yourself with if the market is good, that could make it possible for you not to have to cut back on visits to family that you’d be miserable without, or the advanced degree you always regretted not completing.

2. The two-edged sword of compounding.

Everyone knows (or should know) the value of compounding, since saving early and often can amount to much more savings years later thanks to the way compound interest works.

But they don’t often think about the inverse—how much harm compounding can do when decisions are postponed—such as having your retirement plan evaluated and perhaps redesigned to produce the maximum return as early as possible.

If you procrastinate and don’t pay attention to what your investments or the investment fees are doing to your retirement account, if you don’t consider whether you have the right kind of investments for your needs until it’s really too late to do much good, that can hurt as much as good investments, properly tended as early and often as possible, can produce through compounding over the years.

1. Knowledge blind spots.

This is one of those “a little knowledge is a dangerous thing” moments. If you don’t know something important, and don’t even know that you don’t know it, you can’t fix it.

The report cites Steven Covey’s Habit 2: “Begin with the end in mind.” And if all you’re focused on is the financial—how much money you have, how high your returns are and how much income you need—you’re not paying attention to the big picture.

What do you want to do with the money—and all that new free time—once you’re retired?

It refers back to #3, in that if you know what you want to do in retirement—and maybe you have some lofty goals, like volunteering or pursuing additional education or even opening a business—you can better plan to accommodate those goals.

It’s not just all about the money. It’s about satisfaction.

Instant Insights /

5 retirement 'gotchas' your employees (and you?) need to be aware of

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