6 Retirement Mistakes That Could Cost You Thousands
Retirement planning isn’t just about how much you save — it’s also about the decisions you make along the way. Small missteps in timing, taxes, and investment strategy can quietly drain thousands from your long-term nest egg. Here are six common retirement mistakes experts warn can have expensive consequences if left uncorrected.
Claiming Social Security Too Early
Taking Social Security at the earliest eligibility age can permanently reduce your monthly benefit. Many retirees claim early without fully understanding how much income they’re giving up over a 20–30 year retirement. Waiting longer can significantly increase lifetime payouts, especially for those in good health.
Underestimating Healthcare Costs
Healthcare is one of the largest retirement expenses, yet many people budget far too little for it. Premiums, out-of-pocket costs, dental, vision, and long-term care are often overlooked. A weak healthcare plan can quickly eat into savings meant for daily living.
Not Adjusting Investment Risk
Keeping an overly aggressive portfolio close to or during retirement can expose savings to major market swings. A sharp downturn at the wrong time can reduce your balance and limit recovery options. Gradually adjusting risk helps protect funds you’ll soon need to draw from.
Ignoring Required Minimum Distributions (RMDs)
Forgetting to take required minimum distributions from certain retirement accounts can trigger steep tax penalties. The IRS requires withdrawals starting at a specific age, and missing them can be costly. Proper withdrawal planning prevents surprise tax bills and fines.
Carrying Too Much Debt Into Retirement
Entering retirement with high-interest debt puts pressure on fixed income. Credit cards, car loans, and large mortgages reduce financial flexibility. Paying down debt before retiring can free up thousands in future cash flow.
Not Planning for Taxes in Retirement
Many retirees assume taxes drop dramatically after they stop working, but that’s not always true. Withdrawals from traditional retirement accounts are typically taxable, and combined income sources can push you into higher brackets. Smart withdrawal sequencing can reduce lifetime tax costs.
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