In the USA a recent study by the Employee Benefit Research Institute, and other collaborators discovered that most employed individuals, even those within five years of retirement, have not gone through the exercise of calculating how much they will need to live after retirement. These individuals also indicated that they had not even crafted a plan to make provision for their retirement. Although the research was conducted in the US, the same holds true for many South Africans.

Living from hand to mouth may get you through while you have a job and 20 working years ahead of you, but financial mismanagement when you are close to retirement can spell disaster.

The most common mistakes people make when they are close to retirement age are:

• retiring too soon,
• accepting a retrenchment package without researching other work opportunities,
• choosing the wrong investments,
• spending pension funds when leaving a job,
• failure to plan for health-care costs and
• investing in high-risk ventures.

So, here is a checklist of what you need to do if you are 10 years or less away from retirement. No one can promise that all will be well, even if you do plan ahead, but failure to plan will almost definitely lead to poverty.

Where will you live?
Most people continue to live in the same house, or at least the same community when they retire. These are the people that have made adequate provision for retirement, at least in the short term.

But downsizing or moving to a cheaper neighbourhood may be inevitable. Moving to a cheaper home can help your retirement assets last longer.

Remember that where you live has a strong impact on your expenses. It's no secret that prime neighbourhoods not only cost more to live in, but products and services are often more expensive. I found two examples of this when purchasing natural stone for a renovation. I was quoted R120 per square metre in Sandton, and R89 per square metre for the same product in a suburb just outside Pretoria. When looking for a light fitting a Sandton store was charging R599 and the identical item was R299 in a more modest neighbourhood. So consider your options carefully.

If for example you have equity worth more than R300 000 in your current home, by moving to a cheaper home you could add that equity to your retirement funds. This could give you an income of as much as R2500 per month. If you stay in the more expensive home, you will be sitting on a big overhead. Of course it will continue to grow in value but it's your heirs that will reap the benefits, not you.

Think about your free time
We all fantasise about winning the Lotto and stopping work, but truthfully most of us would go nuts if all we did was watch TV and shop. Some people don't think about how they'll spend their time in retirement until they have their retirement party.

That's a bad idea psychologically as well as financially. Retirees who do well are generally the ones who have interests or even part-time jobs lined up. Sadly, most of us will need those jobs to survive anyway, but don’t wait until you have your gold watch to find an interest or a job. Start looking around at least five years before you retire.

Boost your contributions
Take every opportunity to boost your retirement contributions. Windfalls, extra cash, SARS rebates, should all go into your retirement kitty. Your chances of making it to age 90 have never been better; in fact, many financial planners now use age 95 as their default life expectancy.

Pay back the bond
Get rid of your bond repayment as soon as possible. If you still have some cash left over after paying off your other debt and maximising your retirement contributions, having that house paid off will be a big chunk of money that you can save. Not having a bond in retirement means you can draw less from your retirement savings, allowing them to grow for longer.

Five years away
If you are five years away from retirement, conservatism is your best friend. You'll still need to have some of your investments in good growth areas but whatever you do, don’t go for high-risk investments or 'quick buck opportunities'. Find out what income you can expect to receive. Take the time to see a financial planner so you get a good idea of how long your current savings will last and how much more you will need to save. Contact current and former employers to see if you have any pensions accrued and, if so, how much you can expect to receive.

Calculate income from investments
The longer your expected retirement, the lower your initial withdrawal rate should be. This means you might not be able to draw more than three to four percent of your investments in your first year without dramatically increasing the risk you'll run out of money. If this is the case it is clear that you will have to continue working to supplement your income.

Draw up a mock budget
Now that you have an idea of your expected lifestyle and income you can start to put together a budget that encompasses your projections. This may confirm that you may well need to delay your retirement. If you are lucky, you may discover that early retirement is possible, but it's best to err on the side of caution.

Two years away
When you are two years away from retirement, fine-tune your plan. Now that mock budget can become a reality. See a financial advisor again and get a clearer idea of how much income you can expect. If your plan no longer works, consider other options: working longer, moving somewhere cheaper, living on less.

If you are moving far away from home, take an extended holiday to get a feel for the area. The purpose of this exercise is to find out if you still like the place once you're more familiar with it.

When you are one year away, update your budget and review your portfolio. Again you should get an advisor to have a look at it. Even if you've managed your own investments until now, you'll still want a second opinion from an objective, experienced financial adviser. Start organising the paperwork and inform your employer that you will be retiring. If you're moving, start looking for a suitable property and get your home ready for sale. Banish the clutter, and make necessary repairs.