A financial planner once told me that the most expensive retirement mistakes aren't the dramatic ones. They're the quiet decisions people make without realizing the long-term cost. A few thousand here, an early withdrawal there, skipping a calculation that seemed too complicated to bother with.
These errors compound over years. But every one of them is avoidable if you know what to watch for.
Claiming Social Security Too Early
You can start collecting Social Security at 62, and many people do. But every year you delay between 62 and 70 increases your monthly benefit by roughly 7-8%. That adds up fast over a 20 or 30-year retirement.
Claiming at 62 instead of 67 reduces your benefit by about 30%. If you're in decent health and can afford to wait, delaying is often the single biggest financial move you can make. The Social Security Administration has a calculator that shows the exact difference for your situation.
This doesn't mean everyone should wait until 70. Health issues, lack of other income, or a shorter life expectancy might make earlier claiming the right call. But default to delaying unless you have a specific reason not to.
Underestimating Healthcare Costs
Most people wildly underestimate what healthcare will cost in retirement. A healthy 65-year-old couple can expect to spend $300,000 or more on healthcare over their remaining lifetimes. That figure includes premiums, deductibles, copays, dental, vision, and long-term care, things Medicare doesn't fully cover.
If you're still working and eligible for a Health Savings Account (HSA), max it out. HSAs offer triple tax benefits and the funds roll over indefinitely. They're one of the most powerful tools for covering future healthcare expenses.
No Plan for How to Spend Your Time
This one surprises people. Retirement depression is real, and it tends to hit hardest among people who defined themselves primarily through their careers. Without a plan for what fills your days, weeks and months, the freedom that seemed so appealing can start feeling empty.
Before you retire, develop interests, routines, and social connections outside of work. Picking up a hobby you genuinely enjoy isn't frivolous. It's preventive healthcare for your mind. People who stay connected to a sense of purpose tend to be happier and healthier in retirement.
Withdrawing Too Much Too Soon
The classic rule of thumb is the 4% rule: withdraw 4% of your portfolio in year one, then adjust for inflation each year after. It's not perfect, but it provides a reasonable starting framework.
The problem is that many retirees spend more in the early "go-go years" when they're healthy and excited, leaving less for the later years when healthcare costs climb. A better approach is to build a flexible spending plan. Spend more when markets are up, tighten when they're down, and always keep a cash reserve covering 1-2 years of expenses.
Our guide on retirement savings strategies covers the fundamentals of building and maintaining your nest egg.
Ignoring Inflation
A million dollars sounds like a lot. But at 3% annual inflation, its purchasing power drops to roughly $740,000 in 10 years and $550,000 in 20 years. People who retired in 2005 with what seemed like a comfortable cushion have watched that cushion thin out considerably.
Keep a portion of your portfolio in growth investments even during retirement. Shifting everything to bonds and cash might feel safe, but it exposes you to the slow erosion of purchasing power. A balanced approach, with enough growth to outpace inflation and enough stability to sleep at night, serves most retirees better.
Not Having "The Conversation" With Your Partner
You'd be amazed how many couples reach retirement without ever aligning on basic questions. Where do we want to live? How much can we spend? Do we keep the house? What does a typical week look like?
Unspoken assumptions lead to conflict, especially when one partner wants to travel and the other wants to downsize, or when spending habits don't match. Have the uncomfortable conversations before you retire. They're much harder to have after.
The Good News
Every mistake on this list has a straightforward fix, and most of them don't cost anything to implement. Run your Social Security numbers. Estimate your healthcare costs. Talk to your partner. Sketch out a rough plan for your time and money.
Retirement planning doesn't have to be complicated. It just has to be intentional. The people who enjoy retirement most aren't the ones with the biggest accounts. They're the ones who thought it through ahead of time and adjusted along the way.