One of my biggest retirement money mistakes is not starting to think about retirement sooner. I had a wonderful time in my 20s, had a baby in my 30s, and moved overseas in my 40s. Then my 50s hit, and I realized I was still a long way from being able to retire.
While I don’t regret any of the fun things I did during those decades, I do wish I’d put a little of what I had away for my retirement. I also know I fell into a few classic mistakes that so many people make.
I’m now playing catch-up as I don’t want to reach my 70s and have the regrets so many people have. Money worries are the last thing I want to be thinking about. I want to be out there exploring, having fun, and living it up in my golden years. I’m sure you’re the same too.
13 Expensive Retirement Money Mistakes To Avoid
.For a surprising number of people, the 70s arrive with financial stress they never saw coming.
The problem is rarely one catastrophic decision, but a series of small, avoidable missteps made years earlier that compound into big problems. Luckily, most of them are completely preventable if you know what to watch for.
Here are the 13 money mistakes financial planners see their clients regret most.
1. Claiming Social Security Too Early
This is the #1 mistake financial planners hear about more than any other. You become eligible at 62, and it’s tempting to take the money. But claiming at 62 means a permanent reduction of around 30% compared to waiting until your full retirement age.
Every year you delay past full retirement age, your benefit increases by 8% up to age 70. That is the only government-guaranteed, inflation-adjusted 8% return available to anyone. In your 70s, when inflation is eating into your fixed income, that 30% gap becomes a serious source of stress.
What to do instead:
- Use a Social Security break-even calculator before making any decision. AARP has a free one
- Remember that your choice also determines your spouse’s survivor benefit if you pass away first
- Delaying even two or three years can add tens of thousands of dollars to lifetime income
- This is a permanent financial decision, not a “get it while you can” situation
2. Missing the Medicare Enrollment Window
This one is a simple paperwork mistake with lifelong consequences. You have a 7-month Initial Enrollment Period around your 65th birthday to sign up for Medicare Parts B and D. Miss it, and you’re hit with a permanent late enrollment penalty added to your monthly premium for as long as you have Medicare.
People miss it because they feel healthy, assume it’s automatic, or get lost in the paperwork.
What to do instead:
- Mark your 65th birthday on your calendar right now and set a reminder six months before
- Visit medicare.gov well in advance to understand your options
- Enrollment is not automatic for most people, especially if you are not already receiving Social Security
- Do not assume your employer coverage protects you from this deadline without checking first
3. Not Understanding IRMAA
IRMAA stands for Income-Related Monthly Adjustment Amount, and most people have never heard of it. It is essentially a Medicare surcharge triggered by your income from two years prior.
Take a large one-time IRA withdrawal at 68 to fix the roof, and two years later, your Medicare premiums could jump significantly. The timing catches people completely off guard.
What to do instead:
- Look up the current income brackets, so you know the thresholds
- Plan any large withdrawals carefully and consider spreading them across two tax years
- Use tax-free Roth money for big purchases wherever possible to keep your reportable income lower
- Work with a CPA before making any large withdrawal in retirement
4. Ignoring the RMD Window
When you retire, many people simply leave their 401(k) or IRA untouched and wait. But at age 73, the IRS requires you to start taking Required Minimum Distributions, whether you need the money or not. Those forced withdrawals can push you into a higher tax bracket and trigger IRMAA surcharges on top.
The years between retirement and age 73 are a valuable window that most people waste completely.
What to do instead:
- Use the lower-income years between retirement and 73 to make strategic Roth conversions
- Converting now means paying tax at a lower rate today rather than a higher rate later
- This builds a bucket of tax-free income you can draw on without affecting your Medicare premiums
- A fee-only financial planner can help you map out the most tax-efficient conversion schedule
5. No Tax Bucket Strategy
Most people spend their working lives contributing to pre-tax accounts like a 401(k) or a Traditional IRA. But in retirement, every dollar you pull out is taxed as ordinary income, including your RMDs. It adds up fast.
The goal is to have three distinct buckets working together: taxable, tax-deferred, and tax-free. Most retirees arrive in their 70s with only one.
What to do instead:
- Bucket 1 (Taxable): A standard brokerage account for flexible, lower-taxed withdrawals
- Bucket 2 (Tax-Deferred): Your 401(k) or Traditional IRA
- Bucket 3 (Tax-Free): A Roth IRA or Roth 401(k)
- Use your 50s, 60s, and the RMD window to build that Roth bucket before you need it
6. Getting Too Conservative Too Soon
You spent 40 years building your savings, so it makes sense that you want to protect them. At 65, you move everything into CDs or fixed annuities and call it safe. But by your mid-70s, you realize that inflation has been eroding your purchasing power every single year.
Safe and smart are not always the same thing. You still have a 20 to 30-year time horizon in retirement. Your money needs to keep growing.
What to do instead:
- Keep a balanced portfolio rather than abandoning growth entirely. A 50/50 stocks-to-bonds split is a common starting point
- Inflation, especially healthcare inflation, will make everything more expensive over time
- Work with an advisor to find the right balance between stability and growth for your specific situation
- Review your asset allocation every year rather than setting it once and forgetting it
7. No Decumulation Plan
Accumulation is saving money, whereas decumulation is spending it down strategically. Most people have a plan for the first part and none at all for the second. In retirement, many people simply pull money from whichever account looks highest that month, which means selling stocks in a down market, triggering unnecessary tax bills, and running out of money sooner than they should.
What to do instead:
- Write down a simple withdrawal plan before you retire that specifies which accounts you draw from and in what order
- A basic example: draw from taxable accounts first, tax-deferred accounts second, Roth accounts last
- The 4% rule is a widely used starting point, withdrawing 4% of your portfolio in year one and adjusting for inflation each year after
- Revisit and rebalance your plan once a year, and never make withdrawal decisions based on short-term market emotions
8. Carrying a Mortgage Into Retirement
A mortgage feels manageable when you have a steady paycheck. In retirement, living on a fixed income, it becomes your single biggest monthly expense. Financial planners call it “house-poor,” where your wealth is locked into the property, and there is no cash to live on.
What to do instead:
- Make a mortgage payoff plan in your 50s and 60s with a clear target date
- Even adding one extra payment per year can shave years off the loan
- Aim to enter retirement with your home fully paid off, if at all possible
- If you’re already in your 60s with a significant balance, talk to a planner about whether downsizing makes financial sense
9. Underestimating the Go-Go Years
Most people assume they will spend less in retirement, but in reality, it’s the complete opposite. The first decade of retirement, roughly ages 65 to 75, is often the most expensive. You’re healthy, you have time, and you finally have the freedom to travel, try new hobbies, and spend on experiences. I fully intend to do just that, but it can drain your savings faster than you planned.
The danger is burning through too much too soon, leaving little for the years when healthcare costs start to climb.
What to do instead:
- Build a three-phase retirement budget: Go-Go years (65-75), Slow-Go years (75-85), and No-Go years (85+) when healthcare becomes the dominant cost
- Be honest about your travel and lifestyle spending rather than guessing low
- Factor in healthcare inflation, which consistently outpaces general inflation
- Resist the urge to spend freely in year one just because the account balance looks healthy
10. The Emotional Big Purchase
The day you retire, that RV or vacation home you have always dreamed about moves from a maybe to a why the hell not. But this is an emotional decision, and I’m guilty of making many of these.
You have a couple of great years living the dream in your Winnebago, all of a sudden, it becomes a lot harder to drive, pack up, etc., and it goes from being your dream vehicle to a rapidly depreciating asset that costs a fortune to insure, store, and maintain, and one you use far less than you imagined.
What to do instead:
- Apply a one-year rule to any large retirement purchase. Wait 12 months before committing
- Rent the RV for a season. Rent the beach house for the summer. See if the reality matches the dream
- Ask yourself honestly whether the purchase fits your actual retirement lifestyle, not the idealized version
- Remember that money spent on a depreciating asset is money no longer compounding in your portfolio
11. Being the Family Bank
Helping your children and grandchildren feels good, and, of course, it comes from a place of love. But co-signing a student loan, handing over large gifts you cannot really afford, or bailing out an adult child repeatedly can drain the savings you need for your own care.Â
You cannot take out a loan for retirement.
What to do instead:
- Put your own financial security first. Period.
- Never co-sign any loan unless you are fully prepared to pay it off yourself
- If you want to help family financially, set a fixed annual amount you can genuinely afford and stick to it
- Have an honest conversation with your financial planner before making any large gift or loan to family
12. Ignoring Long-Term Care
Medicare does not cover long-term care. Many people believe it does, and that belief is one of the most expensive mistakes on this list. Medicare covers only 100 days of skilled nursing following a hospitalization. After that, you’re on your own.
A private nursing home in the US currently costs between $100,000 and $150,000 per year. That figure can wipe out a lifetime of savings within two years, leaving a healthy spouse with almost nothing.
What to do instead:
- Look into long-term care insurance while you are still in your 50s, when premiums are significantly lower
- If LTC insurance feels too expensive, create a self-funded plan by earmarking a specific investment account for this purpose only
- Look into hybrid life insurance policies that include a long-term care rider as an alternative
- Have a family conversation about care preferences and put a legal plan in place before it becomes urgent
13. No Survivor Plan for Your Spouse
In many households, one person manages all the finances. When that person dies, the surviving spouse is left grieving and completely lost, facing a tangle of accounts, passwords, and financial decisions they have never had to handle alone. It is one of the most painful and avoidable situations financial planners encounter.
What to do instead:
- Schedule a money meeting with your spouse this month and make it a regular habit
- Both partners need to know where every account is, who the advisor is, and how the plan works
- Use a shared password manager and keep a single document listing all accounts, contacts, and instructions
- Make sure your spouse knows the names and contact details of your financial planner, CPA, and estate attorney
Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. Please consult a qualified financial planner or advisor before making any retirement planning decisions.