Retirement mistake #3 is fleeing to safety.

We heard a lot from the financial pundits about "fleeing to safety" when the market was tanking. They have been quiet during the recent market rally.

For retirees, fleeing to safety can be an oxymoron. Here's why.

By keeping all your investments in Treasury bills, bonds, or even under the mattress, you are preserving your assets and protecting them from the risk of the stock market -- but at what cost?

Inflation is the natural predator of your nest egg.

Inflation at its historical rate of 3 percent can destroy a "safe" nest egg. At that rate, $100 is worth no more than $56 over two decades.

Retirees need to be concerned about maintaining their buying power. In order to maintain the buying power of an American who retired 20 years ago with a $500,000 portfolio, today's retiree would need $924,695.

The only way to maintain buying power is to be exposed to an appropriate amount of stock market risk. Many experts believe retirees should have at least 40 percent of their portfolios in a globally diversified mix of low-cost index funds.

See all ten of the biggest money mistakes a retiree can make.

Dan Solin is the author of the newly published book, The Smartest Retirement Book You'll Ever Read (Perigee Books 2009). His prior books include the New York Times bestsellers, The Smartest Investment Book You'll Ever Read and The Smartest 401(k) Book You'll Ever Read. See SmartestInvestmentBook.com. Read more about Dan Solin.