1. Relying too heavily on Social Security

social security retirement

Millions of seniors collect Social Security in retirement, and those monthly payments play a pivotal role in helping beneficiaries keep up with their expenses. But if you're planning to live on Social Security alone once your career comes to a close, you're making a huge mistake.

Contrary to what you may have been led to believe, Social Security isn't designed to replace your former paycheck. If you were an average earner, those benefits will translate into roughly 40% of your previous income. If you were a higher earner, they'll replace an even smaller percentage.

Since most seniors need more like 80% of their former earnings to live comfortably, you'll need to take steps to secure income outside of what you get from Social Security.

For the most part, this means funding a retirement plan like an IRA or 401(k) during your working years, but it could also mean planning to work part-time in retirement, renting out your home as a senior, or a host of other possibilities. The key, however, is to recognize that while Social Security will help you pay the bills in retirement, it won't be enough to fund your golden years by itself.

First published December 6, 2018: 4:06 PM ET

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