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Published: Apr 28, 2016 13 min read
Roberto Westbrook—Getty Images

by Roger Wohlner / GoBankingRates

A combination of longer life expectancies and woefully inadequate retirement savings might put many baby boomers in a bind during their golden years. That could leave them turning to their children for financial assistance.

Do you need to try a better approach to accumulating retirement savings? Here are 10 signs that if you don’t change your savings habits, you might require help to get through retirement.

1. You Do Not Have a True Investment Plan

If you are relying on growth in your portfolio to reach retirement goals, rethink your financial plan, said Kirk Chisholm, a financial advisor and principal at IAG Wealth Management in Lexington, Mass. Individual investors are notoriously bad at making investment decisions.

The financial services market research company Dalbar studied investor performance from 1984 to 2014. During that 30-year period, investors underperformed the S&P 500 by 7.42% annually, earning an annual return of just 3.69%, Chisholm said.

“Investors may blame the market, their financial advisor or just bad luck, but the reality is that most investors don’t have a plan,” he said. Too many investors gamble with investments by looking for a quick big-return trade, while others “buy and hope” with investments, he said.

To be successful, you need to assess your own investor psychology and find an investment strategy that works for you. “This is where having an investment plan is important,” Chisholm said.

2. You Own Too Much of an Employer’s Stock

Too much of any single investment can be either a recipe for building wealth, or ticket to financial disaster.

On the one hand, employees of Apple who are long-term holders of their employer’s stock are probably pretty happy and may well be on their way to being set for retirement.

But not everyone who loads up on company stock is so fortunate. Enron employees who were big holders of their employer’s stock saw their retirement plans wiped out when the company collapsed and the stock became worthless.

A former colleague retired several years ago with quite a bit of stock from his former employer. He never diversified his portfolio and the stock tanked. The end result was that he had to go back to work in his late 60s and will have difficulty ever fully retiring.

Don’t make the same mistake. Diversify your investment portfolio to protect yourself from being at the mercy of the ups and downs of a single investment.

Related: 5 Things You Should Never Do With a 401k

3. Your Retirement Savings Are ‘Average’

Atlanta-based financial advisor Russ Thornton, founder of Wealthcare for Women, cited figures from the Transamerica Center for Retirement Studies showing that:

  • The average American in his 50s has $117,000 in savings.
  • The average American in his 60s has $172,000 in savings.

Even if you combine those amounts with Social Security benefits — and even if you live very modestly — that is not much. “This level of ‘average’ savings won’t make for a very comfortable retirement,” Thornton said.

Thornton said that too many people think they will start planning for retirement “next year.” Eventually, that notion becomes a recurring annual theme. “They’re not willing to save for the future at the cost of delayed gratification,” he said.

To make matters worse, many people who are behind on retirement savings eventually try to make up for lost time by taking additional risks. That can do more harm than good, jeopardizing any savings they have accumulated, Thornton said.

The best way to avoid this fate is to start planning for retirement today. Even if you can only save a few dollars per pay period, don’t discount the power of compound interest over time.

“The way to get the most out of compound interest is to start saving as soon as possible,” Thornton said.

4. You Are Funding an Adult Child’s Lifestyle

Barbara A. Friedberg, a former portfolio manager and co-founder of Robo-Advisor Pros, said the choice to fund an adult child’s lifestyle is a path to retirement peril for the parent.

“If you don’t contribute enough for your own retirement, you run the risk of outliving your money or worse, putting your children in a position to have to fund your retirement,” she said.

When your children reach adulthood, you need to cut the cord and attend to funding your own future. “You have limited years remaining before retirement to grow your retirement nest egg, and your children have many decades to get their lives in order and build their own financial security,” she said.

Financial advisor Sterling Raskie of Blankenship Financial Planning in New Berlin, Ill., added that one way to avoid having to fund your children’s lifestyle is to encourage your kids to become more self-supportive. If they live at home, charge them rent and utilities.

“Give them a timeline of when they need to be out of the house or completely independent of Mom and Dad,” Raskie said. “Require that they find a job — a serious job, not a one-day-a-week job.”

5. You Have Not Planned for Medical Expenses in Retirement

Too often when saving for retirement, workers neglect to plan for the cost of their health care needs. Neglecting this expense can derail the best-laid retirement plans.

Joy Dietel, chief compliance officer of consumer-directed benefits provider WageWorks , cited Fidelity research estimates that the cost of health care for a couple retiring in 2015 is expected to total $245,000 over the course of their retirement. This is a 29% increase since 2005, when a couple would have been projected to pay $190,000.

Among the couples interviewed in the study, nearly 75% cited being unable to afford unexpected health care costs during retirement as their “top concern.” In addition, only 22% of couples surveyed actually factored in health care costs when planning for retirement.

Dietel said such statistics prove more awareness is needed. “It’s important to understand that there’s a place for both a 401k and an HSA,” she said, referring to a health savings account in the latter example.

6. You Have Excessive Debt

Entering retirement with excessive debt can cause problems down the road. Whether it is credit card debt or even a mortgage, you need to reduce debt when moving into retirement.

Everyone’s situation is different and you may be able to handle a mortgage if you have a sufficient nest egg. But while a mortgage payment might seem affordable early on in retirement — especially if you are still working a bit — you need to assess whether the payment will be sustainable throughout your retirement years.

7. You Do Not Have a Spending Plan

Failing to plan is planning to fail when it comes to retirement spending. You need to put together a retirement budget, and ideally should do it before retirement.

Take a hard look at your lifestyle and what it will take to support that lifestyle. This analysis is critical, and can drive any number of key retirement decisions, including:

  • Where you will live
  • When you will be able to quit working
  • When you should claim Social Security benefits

Once you have enough money saved up, it is important to figure out how you want to spend that money, said Jim Poolman, executive director of the Indexed Annuity Leadership Council.

“It is essential to realize that the money you have now will no longer be replaced by that regular monthly paycheck, so budgeting is crucial,” he said.

In addition, expenses may increase in retirement. In fact, a recent Genworth survey showed that not only does retirement cost more than anticipated, but for 65% of retirees surveyed, expenses rose during their golden years, Poolman said.

8. You Are Withdrawing Too Much Early in Retirement

Withdrawals during retirement are not always equal. Spending on travel and “toys” like a boat or a motor home might be higher in the first few years of retirement. These expenditures might be reduced a bit as you age and slow down. But that doesn’t necessarily mean retirement will become less expensive later.

Later in retirement, high medical costs can replace the spending you did earlier on. Couple medical costs with the fact that you may longer than expected and you can see how it might crimp your nest egg’s ability to sustain you throughout the retirement years. So don’t withdraw too much early in retirement in the hope that your expenses will decrease later in life and you won’t require as much money to live on.

In retirement, you will not have a job’s salary and benefits to help cover expenses such as health care and travel costs, Poolman said. You may have to spend more money on long-term care for yourself or your parents.

“On top of these necessary investments, retirees often like to cross things off their bucket lists and engage in leisurely activities such as traveling — all of which cost money,” Poolman said.

9. You Are Depending on Working to Fund Your Retirement

A survey by Transamerica indicated that 65% of workers planned to work after age 65. Other surveys have reported similar results. While the desire for intellectual stimulation is part of this, undoubtedly the need for additional income in retirement is a key driver.

However, the news is not good for those planning to work late into life in an attempt to shore up their retirement savings. A 2014 survey by the Employee Benefit Research Institute found that 49% of older workers left the workplace earlier than planned. Top reasons included:

  • Health problems (61%)
  • Layoffs or plant closures (18%)
  • Needing to provide care to a family member (18%)

The fact that you may not be able to work as long as planned is one more good reason to save as much as you can during your working years.

Related: 9 Signs You’re Not Saving Enough for Retirement

10. You Do Not Have a Plan for Your Long-Term Care Needs

Someone turning 65 today has a 70% chance of needing long-term care at some point during their retirement, according to the U.S. Department of Health and Human Services.

The cost of long-term care varies quite a bit across the country. Median annual nursing home costs in Alaska are around $281,000, while they are about $51,000 in Texas, according to a 2015 Genworth survey.

Even at the low end of the scale, this cost can be financially devastating and cause you to run through your retirement savings quickly.

Alternatives like long-term care insurance can help, but the premiums can be steep. If you have enough retirement savings, you may be able to self-insure. However you do it, planning for your potential long-term care needs should be a part of your retirement planning.

The best gift parents can give to their adult children is to be self-sufficient in retirement. Addressing all of these issues and others can go a long way toward that end.

This article originally appeared on GoBankingRates.