The 5 Biggest Retirement Mistakes You Can Still Avoid
Retirement is often thought of as the finish line—but in reality, it’s the beginning of a whole new chapter. After years of saving and investing, the decisions you make in retirement can have just as much impact on your financial security as the choices you made to get there.
And unfortunately, some of the costliest retirement mistakes happen after the paychecks stop.
Whether you’re a few years away from retirement or already living it, here are five common pitfalls to watch out for—and more importantly, how you can avoid them.
1. Claiming Social Security Too Early
One of the biggest decisions retirees face is when to start taking Social Security. While benefits can begin as early as age 62, claiming too soon comes with a tradeoff: permanently reduced monthly payments.
For every year you claim before your full retirement age (FRA), your benefit is reduced by roughly 6–7%. On the flip side, delaying your benefit past FRA (up to age 70) earns you delayed retirement credits, which can increase your check by up to 8% per year.
Why this matters:
If you live a long life (which more of us are doing), you may leave tens of thousands of dollars on the table by claiming early.
Social Security is one of the few sources of guaranteed lifetime income, and the decision is largely irreversible.
What to consider:
Your health, family longevity, and whether you plan to keep working.
Whether you have other income sources to bridge the gap.
The impact on your spouse or survivor benefits.
A Social Security timing strategy is one of the most valuable planning tools available—and it’s worth getting right.
2. Not Having a Withdrawal Strategy
You've saved for decades. But do you know how to spend down your assets in retirement in a way that balances income, growth, and taxes?
Without a clear withdrawal plan, retirees risk withdrawing too much too early, running out of money too soon, or triggering unnecessary taxes. Worse, many people simply guess how much they can afford to take each year—and guesswork is not a retirement strategy.
Key challenges:
Sequence of returns risk: Taking withdrawals in a down market early in retirement can cause irreversible damage to your portfolio. For better alternatives, read the article, What to do if You’re Retiring During a Down Market, by Cary Smith of Client First Capital.
Failing to coordinate withdrawals with Required Minimum Distributions (RMDs).
Over-reliance on just one type of account (e.g., IRAs or taxable brokerage accounts).
What you can do:
Create a tax-efficient withdrawal strategy that coordinates withdrawals from taxable, tax-deferred, and tax-free accounts.
Consider a “bucket” strategy where short-term, medium-term, and long-term needs are matched with corresponding investments.
Work with a financial advisor to simulate different market scenarios and adjust accordingly.
3. Underestimating Healthcare and Long-Term Care Costs
Medicare is a fantastic resource—but it doesn’t cover everything. And many retirees are shocked to learn how much they’ll still need to pay out of pocket for healthcare.
In the article, How To Plan For Rising Healthcare Costs, Fidelity estimates the average retired couple age 65 in 2024 will need about $315,000 to cover healthcare expenses in retirement—and that doesn’t include long-term care, which most Americans will need at some point.
Why this matters:
Health expenses tend to increase with age and can easily outpace inflation.
Long-term care services (like assisted living or nursing homes) can cost $4,000 to $10,000 per month—and they’re not covered by Medicare.
What you can do:
Consider long-term care insurance or hybrid life insurance with a long-term care rider while you're still healthy enough to qualify.
Budget for supplemental insurance, dental, vision, and other out-of-pocket costs.
Maximize Health Savings Accounts (HSAs) if you’re still working—these offer triple tax advantages.
Planning for healthcare is not just about the numbers—it’s about preserving your dignity, independence, and quality of life.
4. Ignoring Taxes in Retirement
Think taxes end when your career does? Think again. Taxes can take a significant bite out of your retirement income—especially if you’re not proactive.
Many retirees are surprised by how much of their Social Security, IRA withdrawals, and investment gains can be taxed. Without careful planning, you might pay more in retirement than you expected.
Common mistakes:
Not understanding how Social Security is taxed.
Triggering Medicare IRMAA surcharges by crossing income thresholds.
Letting Required Minimum Distributions (RMDs) push you into a higher tax bracket.
What you can do:
Consider Roth conversions in your early retirement years to reduce future RMDs.
Be strategic about the order in which you withdraw from accounts.
Coordinate your withdrawal plan with your CPA and financial advisor to reduce tax drag over the long term.
Taxes in retirement aren’t just a nuisance—they’re a planning opportunity. The right strategy can save you thousands over the course of your retirement.
5. Retiring Without a Financial Plan
This might seem obvious, but you’d be surprised how many people enter retirement without a real plan—just a collection of accounts.
A true retirement plan goes far beyond your 401(k) balance. It should answer questions like:
How much income can I safely withdraw each year?
What happens if the market drops?
How will I cover unexpected expenses?
What’s my plan for healthcare, housing, and legacy?
Why it matters:
Retirement is a 20- to 30-year phase—one that requires intentional, adaptable strategy.
Without a plan, you risk overspending in the early years or becoming overly conservative and underspending out of fear.
What your plan should include:
A detailed retirement income strategy
Investment allocation and risk management
Tax planning
Estate and legacy planning
Contingency plans for healthcare and long-term care
Working with a fiduciary financial advisor can help bring all the pieces together—so you can retire with confidence, not uncertainty.
The Good News: You Can Still Avoid These Mistakes
Even if you’ve already retired—or made one of these mistakes—it’s not too late to course-correct. The earlier you identify potential issues, the more flexibility you have to adjust your strategy, reduce risk, and protect your long-term financial health. Retirement isn’t just about saving enough—it’s about making smart decisions with what you’ve saved. And that starts with knowledge, intention, and a clear plan.
At Client First Capital, we’re here to help. If you’re concerned that you may be making any of these mistakes, or simply want a second opinion, we offer a free portfolio analysis and build comprehensive financial plans tailored to your unique goals.
Reach out today—we’d be happy to help you move forward with clarity and confidence.
