George Middleton knows a guy whose nest egg was large enough to finance a carefree retirement. But the man had his entire wad invested in high-tech stocks when the sector crashed in 2000. Suddenly, his portfolio's value dropped 80 percent, cracking his retirement plan as it scrambled his nest egg.

His retirement sin was failing to diversify, but at least the guy had a plan, said Middleton, a chartered financial analyst and a CPA with Limoges Investment Management in Vancouver.

“There's some (new clients) that haven’t done any planning at all. That’s kind of sad, but that’s the state of affairs,” said Middleton, who like most planners has sat across the desk from plenty of 50-somethings who are just starting to save for retirement. “Time is the thing in investing that makes it work.”

Middleton cited a statistic that half the people over the age of 50 haven’t yet saved $50,000 for their golden years.

So far away

Maybe it’s the nature of retirement, which starts out so far away and so foreign to most workers. Whatever the reason, too many people are saving too few dollars to finance the kinds of retirements they imagine – filled with travel, hobbies and spoiling the grandchildren. They tell themselves it’ll work out, the money will be there, even though they aren’t doing enough to ensure it is. In other words, they’re lying to themselves.

With that in mind, we asked a handful of Vancouver-area financial advisers to turn on their “lie detectors” to root out some of the most common and riskiest assumptions people make when it comes to saving for their own retirement. Turns out there were too many to fit in one article, but here are 10 common whoppers:

No. 1 – “I still have plenty of time to save.”

“This is only true if you’re still in your teens or twenties,” cau­tioned Beverly Fogle of Cambridge Financial Management Corp. At age 20, if you squirreled away $3,500 a year with an average annual return of 7 percent, you likely would reach $1 million by age 65, Fogle said. If you start at 35, you’d have to save $10,000 a year to reach that same goal. At age 50, you’d have to put away $40,000 a year. And $1 million isn’t enough to finance an extravagant re­tirement today, or whenever you retire. For example, some planners suggest you plan to spend 4 percent of your retirement savings annually, which should allow the principal to grow as a hedge against inflation. That spending rate would bring $40,000 per year on a $1 million fund.

No. 2 – That's OK because “I’ll spend less once I retire.”

“Many of the articles about retirement say you should plan to spend 60 percent to 80 percent of your working income in retirement. We have not found this to be the case,” said Heidi Bixby, CFP, of Johnson Bixby & Associates, LLC.

True, some expenses drop in retirement, but others often take their place, especially now that you’ll have more free time. Travel, golf and many other interests don’t come cheap, and at some point your health-care costs may skyrocket.

No. 3 – I can spend down my account faster because “I don’t plan to live past 80.”

Good, er, luck with the early departure plan. But the fact is that more and more people are living into their 90s – and beyond. If you retire at age 65, there’s a fair shot you or your spouse will have 30 years or more in retirement. Think positively and plan for it. “It’s very possible you will outlive your assets if you plan to die early and don’t,” Bixby said.

No. 4 – I don’t need as much retirement savings because. “I’ll downsize my home and live off the equity.”

“We’ve found most clients are able to find something smaller and more appropriate for their needs,” Bixby said, “but often at a similar cost as their current home and sometimes even more.”

Getting a large amount of equity for retirement by downsizing homes might mean taking an uncomfortable step down in neighborhood quality, said Rick Coen of Golden Rule Financial Planning.

No. 5 – But I have a secret weapon, “My investments will get me to my goals faster.”

Don’t throw money you can’t afford to lose into single or narrow categories of invest­ments. There are legitimate investments that carry too much risk, products that insinuate too much easy money and outright scams well-dressed as “can’t-miss” investments. “The old adage – if it’s too good to be true, it probably is,” said Dan Foster, franchise owner of DHF & Associates.

Or, you may work for a great company whose stock has always soared, so you put all of your money there. But can you say with certainty that market changes won’t evaporate your company’s good fortune – and your retirement funds along with it?

Spread the risk

No. 6 – So, maybe a nice certificate of deposit. “Stocks are too dangerous, especially once I retire.”

Sure, putting all your money in one basket assumes a bunch of risk, but don’t shy away from equities. In the long haul, stocks outperform all other widely held invest­ments. In fact, the stock market has averaged an annual return of 11.9 percent in the past 78 years, from pre-Great Depression to Post 9/11, according to figures that Cambridge Financial Management supplied.

If you instead invested your portfolio in Treasury bills, the average annual return of 3.9 percent during the same long period would barely keep up with the average inflation rate (3.3 percent).

Well-diversified mutual funds tap into the growth of the stock market while tempering its risk. Unless you’re quite rich, you’ll require those higher long-term returns, even in retirement.

If you stash all your money in CDs, for example, “You’ve got inflation risk that could end up eating you alive,” Middleton said. Staid investment options should be part of your investment mix, particularly for money you’ll need to spend in the next year or two. Some have guaranteed returns and none fluctuate as wildly as the stock market, which did drop in 23 of those 78 years.

No. 7 – You haven’t mentioned the bedrock of my retirement plan. “Social Security (or my pension) will bail me out - won’t it?”

Fogle doubts politicians will ever do away with the system, but she believes Social Security cannot afford to be as generous. “It will provide a base income for most folks, but the inflation protection you need will be largely dependent upon your own personal savings and investments,” she advised.

Similarly, private-sector pensions are on the decline. If you have one, you’re likely to get a flat monthly payment that doesn’t keep up with inflation. Even those that appear generous can vanish in corporate bankruptcy.

An exception exists for government employees, whose pensions are an obligation of taxpayers and generally include cost-of-living increases. “Government pensions are the Cadillacs of the pension world,” Fogle said.

No. 8 – Well, saving for retirement isn’t my top priority because “I first need to put my children through college.”

Most financial planners who help clients both with college educations and retirement suggest you are meeting your retirement savings goals before socking away for your kids’ college. “There are many sources of money for college – financial aid, scholarships, work-study programs, loans, etc.,” Fogle said. “But nobody else is going to finance your retirement.”

Putting your children’s welfare first is a noble instinct, but think of it this way, Coen said: “You need to be responsible to make sure you are not a burden to your kids.”

No. 9 – Actually, it won’t be so dire because “I love my job; I’ll keep working.”

This can a reasonable option. Jobs not only bring income and often benefits but also social interaction and challenges. Some people aren’t ready for retirement and quickly grow bored, or worse. “As people, we find the richness of life in our relationships,” Coen said.

That said, working late into your twilight years might not be possible. Professions change. Companies come and go. Age and health problems may take a toll. The best of both worlds may be to save well enough for an early retirement but build in a “work-optional” period. Maybe you can shift to a part-time schedule or become a consultant in your field.

No. 10 – You keep shooting me down. “This is so complicated that I can’t deal with it.”

True, if you’ve waited until your 50s to even begin saving for retirement, your road will be rockier, but it’s never too late. And it’s not so hard if you start educating yourself. There are plenty of savings plans, many with significant tax advantages. Ask what’s available at your workplace, check into individual retirement accounts and other strategies, and take advantage of automatic withdrawals to make saving less painful. Check out a book, take a class or hire a financial expert.

Do it yourself

“Some people are probably well-qualified to do it themselves,” Foster said. “Most people could really benefit from getting a competent adviser to do it.” Saving more for retirement likely will mean spending less today, so set priorities. Think about what's important in your life when deciding whether to spend money on “immediate gratification,” Fogle said. “How will you feel about those choices when you’re 75 and need to take a new job at McDonald's or Wal-Mart to pay the credit card bills? That becomes very immediate then, but hardly as gratifying.”