Make one or two mistakes in handling your retirement money and you could be paying a stiff penalty later in your life. With the stock market on such unsteady legs, it pays to stay clear of these common mistakes:

• You pay attention to the market losses instead of your long-term needs. Catastrophic events and long-term health care needs cause as much damage when you’re caught unawares as does a shaky stock market. Will your nest egg be able to handle the costs of long-term care?
• You forget about inflation and taxes. Your retirement savings is a lot smaller than you think it is when you start factoring in the rate of inflation and the taxes you’ll have to pay when you start drawing out of it. Again, experts say a volatile market isn’t your portfolio’s greatest risk. Inflation and taxes may be.
• You indulge instead of save in the last years before retirement. Just because you’ve got just a handful of years left before you retire doesn’t mean you should go ahead and buy that new Lexus. Some people are able to build up almost a third of their savings in the last five years of retirement because they got serious about saving and investing.
• You think you can withdraw more than you really can. If you rely on average annual returns on your investments to determine just how much you can withdraw, you could be drawing down your retirement fund faster than you should. Average returns are seldom steady. A safe rule of thumb is to count on a 3 percent rate of withdrawal.
• You don’t think you’ll live a long life. Despite the dramatic rise in life expectancy, people still seriously underestimate how long they’ll live. If you’re not thinking about longevity, you could tap out your savings much faster than you should.

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