The 5 Biggest Mistakes People Make Before Retiring

Over the years, we’ve met with people in all sorts of situations when it comes to being ready for retirement. Some people are very well prepared and have thought of nearly everything before seeing us. Others come to us thinking they are ready to retire but have never put an actual plan together.

By definition, a plan should be in writing—even if it’s only a one-page document that outlines key decisions like how much you’re going to take from your investments, which accounts you’ll pull from, how much you’ll withhold for taxes, and when you’ll claim Social Security.

Here are five of the biggest mistakes we’ve seen people make when preparing for retirement—and what you can do to avoid them.

1. Retiring Without a Written Income Plan

Many people spend years building their retirement savings, hit some magic number they thought was enough, but never create a strategy for how they’re going to access those savings. Saving for retirement and living in retirement are two very different things.

It is critical to have a written plan for how you are going to create reliable monthly income from your investments. This includes how much you will withdraw, how you will account for taxes, and which accounts you will pull from—and in what order. Even if you have a rough idea in your head, putting it in writing helps make sure you’ve crossed your T’s and dotted your I’s.

Key Takeaway: A retirement plan isn’t complete until your income strategy is written down.

2. Claiming Social Security Without Understanding the Long-Term Impact

Choosing when to claim Social Security is one of the biggest financial decisions retirees make. Many assume they will claim at age 62 because it’s the earliest they can begin receiving benefits.

That may or may not be the best strategy. Once you turn it on, it can be difficult to reverse and it creates an income floor that must be planned around. It can affect your tax bill, health insurance subsidies before age 65, Medicare premiums through IRMAA, and many other planning decisions. Your spouse’s age, life expectancy, and other income sources should also be considered.

Key Takeaway: Understand the long-term ramifications before making your claiming decision.

3. Ignoring Taxes in Retirement

Many retirees assume their taxes will automatically decrease after they stop working. In reality, withdrawals from traditional retirement accounts, Required Minimum Distributions (RMDs), and the taxation of Social Security benefits can create an unexpected tax burden.

Tax planning often becomes even more important in retirement. There is no reason to pay more in taxes than necessary. Every dollar you save in taxes is another dollar that can support your lifestyle or eventually be passed on to your heirs.

Key Takeaway: Retirement tax planning can significantly extend the life of your nest egg.

4. Taking Too Much (or Too Little) Investment Risk

It is common to move your investments to a more conservative mix before and during retirement. Often, that is a prudent decision if a prolonged market downturn could significantly affect your ability to retire. Other times, people become too conservative. While that may feel safe, it can create problems if your investments fail to keep pace with inflation.

Your retirement nest egg may need to last for decades. It’s important to have the right mix of investments to provide the income you need today while also giving your portfolio the opportunity to grow enough to support future increases in your cost of living.

Key Takeaway: Your investment strategy should balance stability today with growth for tomorrow.

5. Not Having a Plan for Market Downturns

Market corrections and bear markets are inevitable. History tells us that if you live through a long retirement, you will almost certainly experience one or more prolonged downturns.

It is critical to know exactly what you will do when that happens. That could mean withdrawing from cash savings or fixed-income investments instead of stocks, temporarily reducing income, or rebalancing your portfolio. Usually, the worst thing you can do is sell everything and move completely out of the market. Trying to decide when to get back in is largely a matter of luck.

Getting through bear markets is never easy, but having a plan can make the difference between staying retired, running out of money, or being forced to return to work.

Key Takeaway: Don't make emotional decisions during market downturns—follow a plan.

The Bottom Line

Retirement isn't about avoiding every mistake—it's about having a plan for the decisions that matter most. Your income strategy, taxes, Social Security, investments, and response to market volatility all work together. Looking at each decision individually can lead to missed opportunities or unintended consequences.

The good news is that most of these mistakes are avoidable with proper planning. The earlier you begin preparing for retirement, the more options you'll have and the more confident you'll feel when it's time to make the transition.

If you're within a few years of retirement, now is the time to put your plan in writing. Having a clear roadmap can help you retire with greater confidence, knowing you've thought through the decisions that matter most.

Ready to Learn More?

At 55 Wealth, we believe retirement planning is about more than managing investments. It's about creating a coordinated plan for your income, taxes, investments, Social Security, healthcare, and legacy so you can retire with confidence.

Explore more articles in The 55 Perspective hub, or contact us if you'd like to discuss your own retirement plan.