by: PHOTO: MERRY MACKINNON - Certified Financial Planner Karen Day teaches a financial planning class for 50- to 70-year-olds. Day's students often ask her to teach their children how to plan for retirement as well.

These days, instead of retiring, many boomers figure on working beyond age 66 or 67 to make ends meet and to increase savings. But that’s a flawed strategy, says Karen Day, a certified financial planner with Householder Group, if it omits how to cope when a job is lost or work is no longer feasible for medical reasons.

“In fact, it’s quite common for people to retire earlier than they had planned,” Day says.

One way boomers can prepare for a medical emergency or other unexpected crisis is to pay off their mortgages, thereby decreasing the income needed to cover basic expenses, says Day, who teaches a retirement planning class at Clackamas Community College.

Usually held twice yearly since 2008, Day’s two-day workshops draw dozens of students ages 50 to 70. Although some boomers resist thinking about retirement, let alone planning for it, Day says her students are pretty savvy and proactive about financing their retirements.

“The people who are most likely to be unprepared for retirement are the ones who have their heads in the sand,” Day says. “They don’t usually come to a class on retirement planning because they don’t want to know.”

Students in her classes, mostly couples, have on average about $300,000 saved in 401(k)s or other accounts, Day estimates. But like many nearing retirement age, they wonder if they will have enough.

“The big question they come in with is, ‘Am I going to run out of money?,’ “ Day says.

And that’s a realistic concern, she adds. Even with hundreds of thousands socked away, current low interest rates mean that savings earn a meager interest income compared to years ago.

“Low interest rates are good for young people paying off their mortgages, but not for seniors,” Day says.

Retirees need income they can count on, and that means Social Security. But people may apply for Social Security benefits too early, and that can be a mistake, Day says.

Like Social Security income, pensions also deliver dependable income. But even with a pension or, as is more likely these days, a defined contribution plan, people often fail to grasp the ins and outs of their workplace retirement plans.

“If it’s a pension, a 401(k) or a 403(b), you may get one shot at getting this money out and you can’t change that after the fact,” says Day, a certified accountant. “Use tax laws to your advantage. Drawing out money without knowing the tax laws can be a mistake.”

Initially, when developing a plan for retirement, setting financial goals may sound like an obvious first step. But failing to set financial goals ranks near the top of Day’s list of 10 mistakes people make when planning for retirement.

“You need to define what it is you want to do in retirement, whether it’s travel or a move,” she says.

“And commit to making the necessary changes to meet those financial goals.”

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