I was asked recently by a company to speak with a group of their employees who were nearing retirement. They wanted me to give them advice on how they can prepare financially for the years ahead, and what they need to be aware of and what they should plan for etc.

And this is an area I am familiar with and have some experience in, because we have worked with hundreds of people over the past number of years, who are making that transition into retirement so I could share with them what mistakes I have seen others make, and how they can avoid them.

And when I began to think what they were, there were ten areas in particular that kept on coming up, so this week I will share with you five of them with the remaining five to follow later this week.

So, in no particular order the first 5 are:

1. Taking financial advice from journalists

You have a doctor, you have a solicitor, you probably even have a mechanic you use all the time, but who do you go to for financial advice? Unfortunately some people mistakenly believe that the person they read or listen to on the radio is their financial expert, and it is them who they take their advice from.

The majority of financial commentators you read or listen to, do not work in the financial services industry, they work in the media industry and because of this they have to speak to a general audience and sometimes their advice is very generic, and often sensational, and sometimes I think this is deliberate  because it might get them some airtime.

A person I came across recently decided not to invest in a 100% capital guaranteed product because they read an article by the newspapers financial editor which put them off investing in the account. It was lazy journalism at best, with a sensational headline making a general statement about a particular type of product. The journalist never mentioned any specific product or provider but running a mile from the type of account he was referring to was suggested. Why he didn’t name and shame the providers and products we should run a mile from was a mystery. You can’t make sweeping statements like that in my opinion without backing it up with evidence, and then offering an alternative investment suggestion, but he did neither.

The person I met didn’t invest in the 100% guaranteed account because his interpretation from what he read was that his money would be at risk if he did, so he did nothing, and did so out of fear. He left his funds sitting in an account earning close to 0% when he could have invested it, safe in the knowledge his capital was guaranteed as well as earning c. 3% per year in the process.

2. Making the wrong investments

When people retire they may be in receipt of a lump sum payment from their pension fund and an ex-gratia payment from their employer, and both will be deposited into their bank account. And when it lands in their account, invariably they will receive a call from their bank who has noticed the lodgement, so they call offering their assistance and advice regarding some investment options - with them of course. And it's not that you should ignore them either, you shouldn't. You should meet with them and listen to what they are offering, but do nothing for the time being.

Reflect on what they have said and get a second opinion and ask yourself, are you happy with the suggestions put forth. And if it sounds too good to be true, then it almost certainly is.

It's easier to recover from losses when you are younger, but given that you are now retired, if you get it wrong, you don't have the time to make up for losses so be careful, be very careful and make sure your get the right advice because everyone is different and everyone's financial strategy should be unique to them.

And I come across newly retired people all the time who are in a mad rush to do something with their money. They get a little carried away with all the money they now have, are flattered by smooth talking advisers recommending this and that product which later turn out to be the wrong investment all along, but by the time they find this out, the damage has been done.

So, take your time. You really shouldn’t make any commitment to do anything in my opinion for at least a month or two after you receive your monies.

3. Not planning for the unexpected

Retirees think they won’t need the majority of their lump sum, and tie it up in accounts with terms of 5 years+. Just because you are retired doesn’t mean you don’t need access to money in the event of an emergency. If something does arise, and your money is tied up in accounts where you have no access to or limited access with big withdrawal penalties, you may find yourself ending up having to borrow money to get yourself out of a crisis.

So, make sure you have funds set aside that can be called upon at short notice and whatever is left over, look at investing that amount.

4. They are really eager to spend it or give it away

When they receive that lump sum, as I said already, some people are very keen to do something with it i.e. Invest it quickly, or another thing people do is give some of it away to family members.

For many people they have never had so much in their life and they want to share it with their family, and who could blame them, BUT you have to be careful because some of this money may need to supplement your income in retirement, and will be used to pay large annual expenses like health insurance, holidays, car and home insurance etc.

And if you want to give money to your family, work out how much you think you need to hold on to first, and when you know what that number is, then you can give some of what’s left to them if you want to, safe in the knowledge that you don’t absolutely need it.

5. Penny Pinching

People entering retirement become concerned about spending too much and outliving what savings they have. They are concerned, and rightly so about the future cost of health care, nursing home costs and so on. And because of this they live in a state of paralysis waiting for the worst to happen.

And whilst it's important to be cognisant of the future, it shouldn't affect your quality of life now either. You can find a happy balance where you can take that holiday every year without feeling guilty. You can't take your money with you, so enjoy it, and don’t be afraid to loosen the purse strings once and a while.