9 Expensive Mistakes of the Newly Retired

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Transitioning to retired life on a fixed income will undoubtedly have a few bumps in the road. This is a brand-new chapter of life for you, and it's reasonable to expect some challenges ahead. The last thing you want to do, however, is compromise your nest egg with costly, easily avoidable mistakes. After all, you need that money to get you through the rest of your life.

As such, consider these costly mistakes of the newly retired so you don't follow suit.

1. Not balancing your portfolio

Retiring doesn't mean you have to stop investing. You can still dabble in the stock market, but perhaps not as aggressively as you once did. Risky bets could cost you your life savings, which means that you'll either have to go back to work past age 65, or put your hat out on a street corner. Neither of those options sound great in the golden years of life, so it's important to ensure your retirement portfolio is balanced.

"Annuitizing a significant portion of one's retirement income can complement a portfolio of stocks and bonds," says Jim Poolman, executive director of the Indexed Annuity Leadership Council. "Fixed indexed annuities (FIAs) can serve as part of a balanced financial plan because they do not directly participate in any stock or equity investments and [they] protect your principal from fluctuations in the market."

2. Not changing your lifestyle after retirement

Your spending habits as a retiree will need to change if you're going to make it for the long haul. This is especially true if you're not receiving any kind of monthly payments, like Social Security or disability, to help with bills. You can live off what you have in the bank (hopefully; otherwise you shouldn't be retiring yet), but you may have to downsize and rethink your spending strategy.

This means you need to start learning how to save money on everyday expenses, and re-evaluate your budget to find places for cuts. Don't expect yourself to suddenly drop 30 percent or more of your spending. Work your way to it by making small cuts at a time before you retire.

3. Not evaluating risk

When you start saving for retirement, you may have a certain monetary goal in mind — either based on what financial sources have told you, or what you've calculated you'll need based on your lifestyle. But you may not be accounting for the ups and downs of Wall Street and inevitable inflation.

"Revisit your retirement plan to make sure your savings reflect your new needs, and adjust for market conditions," Poolman advises.

4. Spending too much money too soon

When you retire, what you have is what you have. Unless you still have income coming in somehow, you have to mind your money and avoid the temptation to spend it on splurges, especially if you find yourself bored in the first year of your forever vacation.

"Before finalizing your retirement, you must take into consideration that you will only be living on a fixed amount of money," Andrew Fiebert, co-founder of Listen Money Matters, says. "Oftentimes the amount of retirement savings looks pretty large, but retirees must keep in mind that money will have to last a very long time — hopefully a very, very long time."

The enticement to spend your money can be almost irresistible, but discipline is vital. Depleting your money beyond the interest that it earns will hurt the principal and leave you with nothing after just a few years.

5. Loaning money to adult children

I get it — you love your kids. But at what cost?

According to a 2015 Pew Research Center poll, a whopping 61 percent of parents in the U.S. admitted to helping their adult children financially. That may be well and good if you have that kind of disposable income lying around (though it only fortifies your children's reliance on you; learn to say NO!). However, if you already need to cut back because you didn't save enough to live an easy, breezy retirement — which applies to most Americans — providing handouts, the payback of which you may never see, could put you in a financial pickle.

Don't be afraid to cut your grown children off. If you don't have the extra money, neither do they.

6. Taking Social Security benefits too early

The overriding argument against claiming Social Security benefits too early is that you won't receive your full benefit potential. That could come back to bite you later in life.

If you decide to claim Social Security benefits before you reach your full retirement age, you'll receive a smaller monthly payout — up to 30 percent less. If you absolutely need that money before your benefits fully mature, then by all means do what you have to do to survive. You'll be better off, however, the longer you wait.

7. Not taking required minimum distributions after age 70-½

Starting at age 70-½, you must take required minimum distributions (RMDs) from your traditional, SEP, or SIMPLE IRA each year to satisfy rules set forth by the IRS. If you don't, you'll pay penalties.

You can calculate your required RMD by dividing your IRA account balance as of Dec. 31 of the prior year by the applicable distribution or life expectancy. Qualified charitable distributions can satisfy your RMD, by the way, which you would report on Form 1099-R on the calendar year in which the distribution is made. Do good and save yourself the penalties while you're at it.

8. Falling victim to money scams

Scammers love retirees and the elderly. Why? Because they've usually got money to burn, and they're much easier to fool than the average working-age person. Sad, but true.

There are plenty of scams out there, too, and they're getting more intricate all the time — like one where the scammer poses as the victim's grandchild and begs the grandparent to send money. To prevent yourself from being scammed, remember these two major rules: Never provide personal information over the phone or via email, and never wire any money unless you've spoken directly to your family member or friend who is requesting the transfer. (See also: What to Do When You Suspect a Scam)

9. Failing to account for the unexpected

The reality of retirement is that while you'll certainly have more time to kick back and relax, life isn't necessarily going to get easier — and you have to prepare for that. Everyone will die eventually, and it's smart to plan ahead not only for end-of-life accommodations, but also long-term medical care.

You may live a long and healthy life, but eventually you'll need someone to care for you — whether that's in a family member's home or a professional facility — and that will cost money. Hedge your bets by looking ahead and putting those funds aside now. (See also: Is Long Term Care Insurance Worth It?)