If you are quickly approaching retirement, now is the time to ask yourself: will I be able to afford my lifestyle? Many people assume the most important thing they need to live happily in retirement is a large lump-sum of cash to drain. But, the true key to a happy retirement is proper cash flow to meet all of your expenses without cutting into your hard-earned principal. In order to guarantee cash flow for a lifetime, you may need to meet with an advisor to make sure you have made all the right moves before saying good-bye to your coworkers. The following checklist highlights five mistakes people make that can sabotage their retirement cash flow, and how to remedy them.

1. Not Creating a Social Security Strategy

It is important to know your exact Social Security benefits within a few years of retirement. This is especially important if you work for the local, city, or state government and you are eligible for the government retirement plan. This means you will receive both PERS and Social Security income when you stop working. If you haven’t already, make an appointment with your local Social Security office and a PERS representative to determine your benefits. I recommend doing so at least several months before your retirement date, if not earlier. If you’re married—bring your spouse too. Why? It can take up to three months to receive your first check once you apply for Social Security or PERS. This could severely impact your cash flow and make the first few months of retirement a very stressful time.

2.  Not Paying Off a Mortgage

I have had many questions recently from individuals who are about to retire regarding whether or not they should pay off their mortgage. Some may advise against paying off your mortgage. However, if you owe around $20,000-$40,000 and it is possible to pay off your mortgage without borrowing from your 401k, my advice is to retire without that debt. Why? Remember: your cash flow is key. If you eliminate the $1,300-$2,000 monthly mortgage expense before your retirement, your cash flow savings will be phenomenal.

3. Your Portfolio is Too Conservative

Your life changes significantly when you retire because you no longer rely on a paycheck to help you weather economic volatility. A retiree’s greatest fear for their portfolio is a severe market downturn on top of withdrawals. Therefore, if you are retired, you are right to become more conservative with your money. Becoming more conservative does not mean you need to turn all of your investments into cash or put them into CD’s and Money Market accounts. Instead, consider diversification. Why? You still need growth to compensate for your withdrawal rate. Retirees withdraw an average of 4-6% of their portfolio each year to meet cash flow needs. To make up for the money coming out, their portfolio needs to grow 4-6% each year or it will eat away at their principal. Investing in many different things not correlated with each other can protect your portfolio from fluctuations.

4. Skipping Long-Term Care Insurance

We make a huge effort to educate all of our clients about the benefits of Long Term Care Insurance for several reasons. I regularly see a situation with my clients where one spouse moves into an assisted living home or another type of care facility, and the other spouse is left to handle the finances on their own. According to national data, assisted living facilities can cost anywhere between $2,000-$4,000 per month. Can you afford to pay an additional $2,000-$4,000 on top of your monthly expenses? If not, I highly recommend looking into purchasing a Long Term Care insurance policy. This type of insurance can cost around $4,000 for a full year—a significant savings for your monthly cash flow.

5. No Plan to Keep Yourself Happy, Healthy, and Active During Retirement

I truly believe that wealth is more than money, and it is incredibly important to focus on enriching your life in other ways. Retirement should be a stress-free time to center yourself and consider the goals you have for your life. Connect with your loved ones, spend time on the hobbies you enjoy, and take care of your health in a way that matches your lifestyle. You’ve spent many years working hard to meet your goals, and now is your time to take full advantage of your freedom.

Jon Sanchez is a registered representative offering securities and advisory services through Independent Financial Group, LLC (IFG), a registered broker-dealer and investment advisor. Member FINRA/SIPC.  OSJ Branch: 12671 High Bluff Drive, Suite 200,  San Diego, CA 92130.  Sanchez Wealth Management, LLC and IFG are not affiliated entities.  CA Insurance Lic. #0772626.