Most parents want to do whatever they can for their children, but loaning money can breed disaster if there is no plan in place, said Denise Nostrom, founder of Diversified Financial Solutions, a financial advisory firm with offices in New York and Connecticut.

Being the bank for adult children is one of the mistakes people can make when they are trying to map their own retirement, she said in a recent conversation with Financial Advisor magazine.

“I have two clients who are going through this right now. They are giving their adult children money, but they may be jeopardizing their own retirement,” Nostrom said. The parents need to make sure they will get paid back, or that they have a backup plan if the children can’t repay the money.

Financial advisors can help near retiree clients prepare for these situations so they avoid some common mistakes, she added. The planning can include emotional preparation, as well as financial.

Advisors can take a deep dive with clients to make sure they know what the clients want to do on day one, week one and beyond in their retirement. “If they enjoy working, they may feel lost when they retire if they do not have a plan.” Some advisors are more concerned with the financial side of retirement, but others will want to include the emotional aspects as well, so that clients have fun in retirement, as well as have enough money to live on, she reiterated.

To satisfy the financial part of the retirement puzzle, clients should be prompted to save for potential health care costs that go beyond Medicare and supplemental insurance. Each person or couple is different and requires different planning but clients may want put aside a cash reserve to pay for health care costs or long term care costs, just like they have cash reserves for the good side of retirement, Nostrom said.

Tax planning also is important. Depending on the type of assets, clients may want to withdraw from a mix of taxed and untaxed accounts to maximize income.

“This can require planning before retirement, so that there is a mix of accounts to draw from,” she added.

A decision also needs to be made on when to take Social Security. There are many options and some cannot be changed once they are put in  place.

Before retirement, advisors also should help clients determine how much debt and what kind they can carry into the post-work years. Some may decide to carry mortgage debt, but it is advantageous to pay off credit card debt, Nostrom advised.

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