Retire Smarter: How to Avoid the 5 Most Common Mistakes

 

Retirement is meant to be a time of freedom, flexibility, and fulfillment. But achieving that vision doesn’t happen by accident. Even well-prepared retirees can stumble into financial pitfalls that impact their lifestyle and peace of mind.

 

Here are five of the most common mistakes people make in retirement—and how to avoid them.

 

1. Underestimating Healthcare Costs

 

Many retirees are surprised by how much they spend on healthcare—even with Medicare. Out-of-pocket expenses, premiums, dental, vision, and long-term care can add up quickly.

 

How to avoid it:
Factor healthcare into your retirement plan early. Consider a Health Savings Account (HSA) if you're still working, evaluate supplemental Medicare plans, and explore long-term care insurance before retirement, when premiums are lower.

 

2. Claiming Social Security Too Early

 

Taking Social Security at 62 may feel like a win, but it could significantly reduce your lifetime benefit. Every year you delay (up to age 70), your benefit increases—permanently.

 

How to avoid it:
Work with a financial advisor to run the numbers. Consider your life expectancy, income needs, and spousal benefits before locking in your decision.

 

3. Overspending in the Early Years

 

Retirement often starts with a “go-go” phase—travel, hobbies, and lifestyle upgrades. But front-loading spending can jeopardize long-term financial security.

 

How to avoid it:
Create a flexible withdrawal strategy that balances your early goals with long-term needs. Establish guardrails to help you stay on track—even as markets and spending habits change.

 

4. Ignoring Tax Planning Opportunities

 

Without a paycheck, many retirees think taxes are no longer a big concern. But retirement income—from IRAs, pensions, Social Security, and investments—can still push you into higher tax brackets.

 

How to avoid it:
Use tax-efficient withdrawal strategies and consider Roth conversions, Qualified Charitable Distributions (QCDs), and other tools to manage your tax liability in retirement.

 

5. Failing to Plan for Longevity

 

Many retirees plan for a 20-year retirement—but may live 30 years or more. That extra decade requires more than just good luck. It requires a solid strategy.

 

How to avoid it:
Plan for longevity by stress-testing your portfolio and ensuring it’s designed to provide sustainable income well into your 90s. Don’t rely on averages—plan for the possibility of living longer than expected.

 

Final Thoughts

 

Retirement should be a reward—not a source of stress. By anticipating these common mistakes and making thoughtful adjustments, you can build a more confident, resilient retirement plan.

 

Need help creating your personalized retirement roadmap? We’re here to guide you every step of the way.