The 5 Most Common Mistakes to Avoid in Retirement Planning

Retirement offers exciting possibilities but turning that dream into reality requires careful planning. Unlike past generations, life expectancies are rising, and so too are inflation and healthcare costs. Solely relying on Social Security may not be enough to maintain your desired lifestyle once you leave the workforce.

Here's why a well-crafted retirement plan is so important: Planning allows you to estimate your future needs, explore income sources like pensions and investments, and create a sustainable withdrawal strategy, creating a balance of security and enjoyment.  

We know that navigating retirement planning can be tricky. You may wonder what you’ll do once you finally retire and how long your retirement will last. The right strategy builds confidence in the unknown so you enter retirement excited about the endless possibilities before you. But while mistakes can happen, you don’t have to let them interfere with your retirement. 

Here are 5 common mistakes to avoid in retirement planning. 

5 Common Retirement Planning Mistakes

To ensure a smooth retirement journey, it's important to avoid common pitfalls like procrastination, underestimating expenses, and neglecting key considerations like taxes and estate planning. 


Procrastination plagues everyone, from the high schooler studying for an exam to you as the retirement investor planning your financial future. There are a number of factors that contribute to procrastination including anxiety around the process, underestimating the time you have until retirement, or fearing the changes retirement brings to your life. 

This delay can manifest in various ways, like neglecting to save for retirement, postponing critical decisions such as your retirement age or investment strategies, and failing to address healthcare needs. Procrastination can have real repercussions, limiting your retirement options and increasing your financial risk. By recognizing the reasons behind why you’re procrastinating, you can overcome this hurdle and better prepare for retirement. 

Educate yourself about retirement options and set clear goals before breaking them into manageable tasks. Regularly review and update your plan and tasks list as you need and consider consulting a CERTIFIED FINANCIAL PLANNER™ practitioner for advice. Saving can be difficult but trying to prioritize retirement as a non-negotiable expense goes a long way.

If you focus on the benefits of retirement planning and visualize your ideal retirement lifestyle, you’ll feel more pride in taking proactive steps towards the future you want.

Underestimating Expenses 

Many people assume their spending will automatically decrease after they stop working. You may be spending less in some areas, but retirement brings its own set of costs in others. Let’s take a look at a few:

  • Healthcare: Medical needs often increase with age and you need to factor in potential medication costs, deductibles, and even long-term care needs.
  • Lifestyle: Trading your slacks for sweats doesn't guarantee lower spending. You may travel more, pick up a new hobby, or eat out more often than you used to.
  • Inflation: The cost of living increases over time and if you don’t count for inflation, your purchasing power decreases throughout your retirement.

By underestimating your expenses, you may be forced to cut back on your desired lifestyle, pull from savings meant for emergencies, or even delay retirement to generate more income. 

Start tracking your current spending for a few months to create a baseline budget. As best you can, factor in potential increases for healthcare, hobbies, and inflation (researching average healthcare costs for your age group and geography and applying a conservative inflation rate to your current expenses helps you create a more realistic figure). 

Ignoring Tax Considerations

Choosing the wrong retirement accounts can lead to unnecessary, and potentially unforeseen, tax burdens. For example, traditional IRAs offer tax-deferred contributions, but withdrawals are taxed as income. On the flip side, Roth IRAs offer tax-free withdrawals but contributions are made with after-tax dollars. These are the nuanced differences to understand between your accounts.

Some retirees are surprised to learn that a portion of your Social Security may be taxable depending on your income. (To see if your Social Security benefits will be taxed, use the SSA's benefit calculator to estimate your combined income and compare it to the filing-specific base amount.) 

You also don’t want to miss out on incentive opportunities like employer matching contributions and tax deductions for retirement savings. 

Understanding your account options is crucial. Research and choose retirement accounts based on your tax situation. You may want to look to maximize tax advantages, like tax-deferred contributions or tax-free withdrawals, depending on your needs. It never hurts to consult a reputable tax advisor or financial planner to understand how taxes will impact your specific retirement income sources.

Over Reliance on Social Security 

Social Security will provide some monthly income in your retirement. The average Social Security retirement benefit is $1,907, which is helpful, but considering inflation, unlikely to cover all your expenses. The Social Security trust fund also faces uncertainties and future benefit cuts are a possibility so over reliance may cause financial strain or delayed retirement.

Build a balanced plan by diversifying your income. This may look like supplementing Social Security with retirement accounts, pensions, part-time work, or investment returns from a diversified portfolio. If you estimate your retirement needs, along with healthcare, inflation, and long-term care, you can determine how much to supplement with Social Security.

Neglecting Estate Planning

Without a will or trust, your hard-earned assets might be distributed according to state law, potentially leading to family conflict and delays for your loved ones. Probate—the process of distributing assets without a will—is costly and time-consuming. It delays access for your loved ones when they might need it most. And if you become incapacitated for some reason, neglecting estate planning leaves your finances and healthcare decisions in limbo, creating stress for your loved ones during an already stressful time.

Schedule a meeting with an estate planning attorney you trust and make this a priority alongside your retirement savings. Regularly review and update your plan to keep your wishes up to date and help educate their loved ones on what to do with their inheritance responsibly. 

How to Plan for Retirement

They’re called your “golden years” for a reason. It’s time to relax, reflect, and enjoy the reward of the hard work you put in during your career. Retirement may seem daunting but it doesn’t have to be. Actionable steps to plan your retirement will make your life much easier when it finally comes time to kick back.

The best part is, you don’t have to go at it alone. Schedule an appointment with a trusted retirement advisor to craft a plan based on your retirement goals. You're building your financial future so take pride in being a part of the planning process.

Interested in learning more about retirement planning? Consider attending one of our retirement seminars or webinars, hosted by experienced financial advisors who can assist with all your retirement planning needs.