Planning for retirement is one of the biggest decisions the average person will ever face.

Planning should start right at the start of your working life but sadly this seldom happens.

The reason is that most people are not taught this important aspect of life while at school or college.

Not having a mentor with experience is another aspect most people lack.

To plan effectively for this stage of your life a few things need to be taken into consideration.

Aspects such as what type of lifestyle do you wish to enjoy?

Do you want to travel?

The important thing is to balance your lifestyle before retirement with the lifestyle you want for your golden years.

The most common mistakes most people make are discussed below.

Living in a way that is too lavish for the income available takes considerable planning.

Many have no idea what sort of residual income is required to maintain their current lifestyle.

The general rule of thumb is that one will need at least 80% of their current annual income to maintain a lifestyle in the same way you do before retirement.

However, this rule does not take into consideration the fact that with having more available free time most people may wish to start traveling around a lot more.

Going into retirement means considering the increased need for health care that has been found to reach $240,000 for a couple.

Not providing some sort of cover or safety net can destroy any retired person very quickly.

There are options available to cover this large potential cost more effectively.

At the stage of retirement, most people enjoy reasonable health but this could change drastically in a short period of time.

Again historic figures indicate that as many as 70% of retired people over the age of 65 will need some sort of health care in their life.

Health care can run into staggering amounts per year.

Charging thousands per room in a nursing home in certain areas.

These costs will increase due to inflation and must form part of the calculation when planning your retirement.

Bear in mind that this could also not be a once-off situation and could occur more than once in the life of a retired person.

Saving for retirement is thus the most important issue and the sooner one begins preparing themselves the better.

Keeping the retirement plans a living and updated thing is another vital factor to consider.

With personal changes, the plan must be updated and adjusted to take these changes into consideration.

When planning a retirement it is important to diversify and not just rely on one method of retirement planning.

This could involve savings, shares, property investments and many others.

Markets could collapse and having a diversified retirement plan could make the risk factor more attractive and safe.