Clients who are on the cusp of retiring comfortably should be calm, cool, and concerned with nothing more than traveling the world, booking tee times, and spoiling their grandchildren.

But the end of regular paychecks, the beginning of a new uncertain phase in life, and the current financial climate can conspire to create a sense of panic, even in those who have more money than they could have ever imagined.

Your knowledge and experience can prevent anxious clients from undermining themselves by identifying these common but detrimental errors.

1. Overvaluing Earnings

Working clients who are earning more money than they have for most of their lives can be reluctant to quit, even after they reach their sixties and become financially independent.

But you can show them that if they are more than ready to retire, an extra year of earnings doesn’t make that much difference in how much they might spend in retirement.

A simple (perhaps simplistic) example: say a client is deciding whether to retire now, or work one more year. Assume the extra year of work will bring him $60,000 more in after-tax income.

That’s a lot of money to most people. But if you divide it out by, say, a 25-year retirement, it works out to maybe a few hundred dollars more in monthly spending than if he were to retire today.

That amount probably won’t be enough motivation to get him to put in another year at a job that he doesn’t enjoy, especially if he realizes that after one more year of work he’ll be one year closer to the end of his life.

2. Going Debt-Free

Many wise clients entering retirement will establish a monthly spending plan, perhaps even at your request, and with your assistance.

If a good portion of the expected expenses is comprised of a mortgage or car loan payment, the clients may be tempted to lower their spending by paying off the debt right away. The allure of eliminating the debt (and the monthly payment) is further enhanced by the fear of incurring more interest expense.

This seemingly-sensible step could be lamented later on. First, the loss of employment and an earned income means the clients may never again be able to qualify for a new loan with the most favorable terms.

Even if they can get a loan in the future, it will likely be at a higher interest rate than any debt they carry now.

In fact, in light of today’s ultra-low interest rates, a case could be made that responsible retiring clients should get a new fixed-rate long-term mortgage for as much as the lender will allow, and safely park the proceeds for future expenses and emergencies.

Those who can’t bring themselves to take on a new mortgage now should at least pay the current loan off as slowly as possible, and establish a home equity line of credit to draw from in the future.   

3. Waiting to Take Social Security

Conventional wisdom holds that retirees should delay initiating Social Security benefits as long as possible, since every year they hold off brings a higher eventual check, until they reach 70 and there’s no further benefit to delaying benefits any further.

But waiting to take the check means . . . no checks, and the client must live to 80 or so until the larger amount makes up for the postponed payments.

Living off of savings in lieu of Social Security also creates its own set of potential problems, as the dwindling principal means clients are less able to able to handle a financial emergency, or take advantage of a future investment opportunity.

Remember that the clients probably spent three or four decades receiving a regular paycheck to cover recurring expenses. The Social Security check may not be as large as their previously-earned income, but the regular, predictable payment will help smooth the transition into retirement.

4. Delaying or Denying “Big” Expenditures

It’s understandable why new retirees are in a frugal frame of mind. But some may need to see that they could have more money than they have time left to enjoy it.

This applies particularly to traveling, as retirees' eyes, ears, minds, and knees soon might not be strong enough to endure a longer trip, much less enjoy it.

It’s also a question of “when,” not “if” home improvements will be needed. So any big projects completed and paid for now will not only boost the future use and enjoyment experienced by the homeowners but could also be partially recouped when the house is eventually sold.

As with home renovations, some clients will be hesitant to make a slightly impractical, fairly expensive (but highly desired) purchase, such as a boat, sports car, or motor home.

You can ease their thrifty mind by pointing out that the price tag of the item isn’t the true cost. It’s actually the purchase price, which is less then what it can be sold for if the client wants (or has) to sell it in the future.

(Note: this rationalization is likely to endear you to the “spending” half of the typical couple, and agitate the “saver” in the relationship.)

5. Leaving a Lot Instead of Giving a Little

Many of your clients are likely well-meaning older parents who intend to bequest any unneeded assets to their adult children and growing grandchildren.

Yet if those clients live into their mid-to-late 80s, by the time the estate is settled the next generation will at least be middle-aged, if not already retired. And the grandchildren could be full-fledged adults.

Of course, any money left by your clients to their descendants should certainly be appreciated. But a few thousand dollars given now to the adults (or a few hundred to the grandchildren) may be more valued than 10 times that amount left to them several decades from now.

And besides, the clients get to witness their children and grandchildren enjoying the gift in person now rather than wondering how it will be used after the they are gone.