Mark and Linda, both 62, had worked hard their whole lives. They raised a family, paid off most of their mortgage, and built up a decent nest egg. Feeling confident, Mark decided to file for Social Security as soon as he could. Linda wasn’t sure, but they thought, “Why wait? The money is there.”
At first, it felt great — more income each month and the freedom to cut back on work. But as they started planning out their retirement budget, cracks began to show. Healthcare costs were higher than expected. Their tax bill surprised them. And they realized that by claiming Social Security early, they had locked in lower payments for life. Suddenly, the retirement they had dreamed about felt a little less certain.
Mistake #1: Claiming Social Security Too Early
Why it’s a problem: Early claiming can reduce monthly benefits by 44% compared to claiming at age 70.
What to do instead: Run break-even analyses, consider spousal strategies, and evaluate longevity and income needs.
Mistake #2: Underestimating Healthcare and Long-Term Care Costs
Why it’s a problem: Fidelity estimates the average 65-year-old couple will spend over $300,000 on healthcare in retirement.
What to do instead: Consider HSAs, and be intentional about Medicare planning.
Mistake #3: Ignoring Taxes in Retirement
Why it’s a problem: Withdrawals, RMDs, Widow Penalty, and Social Security benefits can push you into higher tax brackets.
What to do instead: Explore Roth conversions, tax-efficient withdrawals, and charitable strategies (QCDs).
Mistake #4: Not Having a Retirement Income Plan
Why it’s a problem: Without a plan, you risk running out of money—or living too conservatively and not enjoying retirement.
What to do instead: Use a structured withdrawal strategy (Monte Carlo & bucket strategy, or similar dynamic spending approach).
Mistake #5: Failing to Revisit and Adjust the Plan
Why it’s a problem: Life, markets, and laws change—but many retirees “set it and forget it.”
What to do instead: Regularly review investments, income, insurance, and estate plans.
Like many situations they'd faced in the past that required specialized knowledge, Mark and Linda decided to consult with an expert. Ultimately, they decided to take a different approach. They built a structured income plan, adjusted their withdrawal strategy, and even ran projections on what delaying Social Security could mean for Linda. They also factored in healthcare costs and set aside funds for future expenses.
The result? Their plan shifted from uncertainty to clarity. Instead of worrying about running out of money, Mark and Linda felt they were on solid footing. They’re traveling more, spending time with their grandchildren, and enjoying the retirement they worked so hard for.
And the best part? They know they’re making informed decisions — not costly mistakes.
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Frequently Asked Questions About Retirement Mistakes
Q: What is the most common retirement planning mistake?
A: One of the most common mistakes is claiming Social Security too early. Claiming at 62 can mean a 44% reduction in your monthly check for life compared to claiming at age 70. Social Security is better than any annuity you can buy in the private sector, and even better, you have already paid for it. Make it work for you as much as possible.
Q: How much money do I need to retire comfortably?
A: A general rule of thumb is to replace 70–80% of your pre-retirement income, but the right number depends on your lifestyle, healthcare needs, and longevity. A personalized plan is always best.
Q: How can I make sure I don’t run out of money in retirement?
A: The key is having a structured income strategy. Flexible withdrawal approaches, like a bucket strategy or dynamic spending, help balance growth with protection against market downturns.
Q: Are taxes lower after I retire?
A: Not always. Withdrawals from 401(k)s and IRAs, Social Security benefits, and required minimum distributions (RMDs) can increase your tax bill. Possible tax rate increases and filing status change from married to single are also factors. Smart withdrawal sequencing and Roth conversions can help reduce taxes.
Q: Should I work with a financial advisor before retiring?
A: It depends. An advisor can help you avoid costly mistakes, maximize Social Security benefits, plan for taxes, and adjust your strategy as life, markets, and laws change. Some people do this on their own successfully as well. It largely depends on your willingness to get educated and how you want to spend your time and energies.
The content is developed from sources believed to provide accurate information. The information in this material is for educational purposes only and is not intended as tax, investment, or legal advice. It may not be used to avoid any federal tax penalties. Please consult legal, investment, or tax professionals for specific information regarding your situation. Mayfair Financial and FMG Suite developed and produced this material to provide information on a topic of interest. FMG is not affiliated with the named state-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.