From notes I took in a pre-retirement class, October 2010 (see Retirement Tips - 1, Retirement Tips - 2, and Retirement Tips - 3 for other suggestions and observations):

• concerning taxes and tax planning in retirement, don't expect taxes to "make sense" or be "fair" — "Taxes are laws!"
• during retirement, estimate you'll need 80-100% of current take-home pay
• Mistake #1 is being too conservative in retirement investment
• Mistake #2 is spending your pension plus second-job salary — try instead to save the pension
• "There are two times when people forget their investment principles: at the top of the market, and at the bottom."
• you have four bases to watch:
  • cash reserves
    • keep three months of living expenses
  • insurance
    • life insurance is only needed to take care of those who are dependent on you
    • a survivor annuity can partially replace life insurance for your spouse
    • "People treat a life insurance like a child. It's OK to cancel!"
    • "You don't want to collect on any insurance!"
    • disability insurance is needed if you still have to work
    • liability insurance is important to protect you against lawsuits, etc.
    • long term care insurance is complex
  • fixed assets
    • an old-system US Civil Service pension (CSRS) is like having millions of dollars in fixed-return savings — so you can be more aggressive with the rest of your retirement investments if you have such a pension
    • "If you hate someone, leave them saving bonds!" — cashing them is worse than having a root canal
  • equity assets
    • read The Big Short
    • mutual funds are good
    • real estate is a good long term investment but isn't liquid
    • beware of transferring tax-deferred savings into a Roth IRA, as it will trigger a big tax bill
    • right now (2010) annuity options do not look good, because you are locking in a low interest rate
    • in estimating how much longer you have to live, "When you get to DEAD, which is 85, the actuaries throw up their hands and say '8 years'!"
• Simplify your life!
• start taking Social Security the day you're eligible and not working, or in any case by age 66
• concerning your mortgage, "Follow the Rule of Sleep" — that is, be comfortable
• don't move to a state that doesn't have an income tax (or doesn't tax Federal pensions) just to avoid taxes — "Don't let the Tax Tail wag the Deal Dog."

^z - 2012-05-12