NEW YORK (CNN/Money) - Today the leading edge of the nation's 76 million boomers will turn 59 1/2 years old. This means they'll be able to withdraw money from their retirement accounts without the threat of paying withdrawal penalties.

But don't rush to cash in on your egg nest just yet. In today's five tips we'll tell you how boomers should start positioning themselves at the starting gate of retirement.

Remember that even though the 10 percent penalty disappears, you still have to pay income taxes on the lump sum you withdraw.

"The basic rule of thumb is not to touch your retirement money until you're retired," says financial planner Doug Flynn. "You may not be penalized," Flynn says, "but you will lose investing power."

If you're still collecting a paycheck and you withdraw $20,000 dollars from your 401(k) or IRA, that might just bump you up to a higher tax bracket. And this means you'll have to pay even higher fees. If you plan on retiring in the next year, it pays to wait until January when salary is not a factor.

If you really need a stream of cash, think about a home equity loan, advises Craig Brimhall vice president of Retirement Wealth Strategies at American Express Financial Advisors.

Americans in their early 60s, on average, can expect to live another 20 years past retirement age, according to the National Center for Health Statistics. The cost of living will probably increase two or three times during this time.

The most common mistake people make when going into retirement is underestimating their life expectancy and expenses, according to Brimhall. If you're too conservative, you may run out of money. Retirement is an investment that is meant to grow.

So keep invested in the market and take a more balanced approach to investing. A good mix is stocks, bonds and real estate, he says. Don't withdraw more than four to five percent a year he advises.

For more guidance in calculating your retirement needs and how you should consider making withdrawals from your nest egg, go to the American Express Web site at www.americanexpress.com or the Web site of mutual-fund company T. Rowe Price.

The average boomer didn't start saving for retirement until age 31, according to financial services company TransAmerica. This year if you are over 50 years old you can put $4,000 extra pre-tax dollars in your 401(k).

This catch-up contribution can give you a bit of a boost if you're getting panicky, says Jules Lichtenstein of AARP.

In 2006, you'll be able to put in an extra $5,000. Not only will you be making money on your investment, you'll also be reducing the amount of taxes you'll have to pay.

Healthcare costs continue to rise. Premiums have gone up almost 60 percent in the past five years according to the Kaiser Family Foundation. And we're not going to see these costs decrease anytime soon.

"Boomers are waking up to being sixty years old. And this is important. At 50, we joked that we had looked a lot older. But when boomers are two years away from social security, it's no longer a joke," says Lichtenstein.

To safeguard against becoming uninsured, check out Family Health Plus programs that are offered in your state says Chris Miller of the New York State Department of Aging. To qualify for this program you must not make above a certain income. If you're a single adult in New York, you cannot generate more than about $9,570 gross income annually. The Family Health Plan does operates similarly to Medicare. For more information call 877-934-7587.

Medicare is a tremendous help in paying for medical costs, according to Steve Weisbart of the Insurance Information Institute. But remember, Medicare does not cover long-term care insurance, cautions Amy Bernstein at the Department of Aging. At 59 1/2 years old, you can get a better rate on long-term care insurance than you would at 75.

Boomers have a lot of value asset in their homes, says Fred Brock, author of "Live Well on Less than you Think." If you're looking to retire, the best thing you can do is move to a cheaper part of the country says Brock.

He says that 60 to 80 percent of boomers considered moving because of stress factors. "Boomers simply cannot maintain the BMW lifestyles they were accustomed to," he says.

Places like Bloomington, Indiana or Sante Fe are already seeing increases in home values because boomers are recognizing how much lower the cost of living can be. And these college towns offer culture and activity as well. Check out www.bestplaces.net to compare the living costs of cities, crime rates and weather statistics.

Gerri Willis is a personal finance editor for CNN Business News and the host for Open House. E-mail comments to 5tips@cnn.com.