Retirement, a word often associated with both excitement and anxiety, represents a cherished goal of relaxation and pursuing passions for many, yet it can feel like a financial cliff edge for others, filled with uncertainty and potential pitfalls.
The truth is, our lives are undeniably busy. Juggling work, family commitments, and personal aspirations often means that comprehensive financial planning takes a backseat. This, coupled with an overwhelming amount of information – some accurate, some less so – contributes to many individuals feeling lost when it comes to securing their financial future. It’s easy to understand why retirement missteps are so common when faced with such complexities.
This in-depth exploration aims to uncover common retirement account blunders that not only frustrate financial advisors but can also cause significant stress for spouses and families, with understanding these pitfalls being the first critical step toward avoiding them and securing your envisioned retirement.
1. **Relocating on a whim**
The allure of warmer climates or new surroundings often beckons those approaching retirement. Many envision a dream destination, whether it’s Florida, a beachside town, or even a foreign country. This impulse to relocate on a whim, however, can quickly turn a dream into a nightmare if not thoroughly considered. The initial excitement can mask underlying issues that only surface after a permanent move.
The pace of life might be too slow, social circles may be hard to establish in a new place where everyone is a stranger, and even seemingly idyllic activities like endless rounds of golf and walks on the beach can grow tiresome. For those considering retiring abroad, the challenges are compounded by new languages, different laws, and unfamiliar customs that can overwhelm even the hardiest retirees. These factors highlight the importance of careful pre-move evaluation beyond just the picturesque brochures.
The actionable advice here is to “Test the waters before you make a permanent move.” This means spending extended vacation time in your chosen destination well before your retirement date to get a true feel for the people and lifestyle. It’s also wise to check out information on specific areas, as popular destinations can come with “longer-term challenges that might hit your wallet,” such as flood insurance costs, which can be expensive or even unavailable in some coastal or inland areas.
A smart strategy is to rent before buying. The context provides an example of a couple who “circled Savannah, Georgia, for their permanent retirement nest” but wisely “decided to lease an apartment downtown for a year before building or buying a new home.” Their experience revealed that “the Deep South didn’t suit their Philadelphia get-it-done-now temperament,” leading them to become “halfback retirees” — people who head to the Deep South, find they don’t like it, and move halfway back toward their former home up north. This illustrates the financial and emotional toll of a poorly planned relocation.
2.A pervasive blunder is falling for ‘get-rich-quick and other scams,’ which cause Americans to lose ‘hundreds of millions of dollars a year’ according to the FTC, as scammers exploit seniors’ accumulated wealth, highlighting that a secure retirement is built on ‘hard work, careful planning and decades’ worth of wealth-building’ with ‘no shortcuts.’
The scale of this problem is staggering. Credit card fraud, for instance, was “the most common type of identity theft in the first quarter of 2025” and is projected to “reach $43 billion by 2026.” In the same quarter, “365,758 cases of identity theft were reported,” a significant increase from the previous quarter. The grim reality is that “every 14 seconds someone in the U.S. falls victim to identity theft,” and a staggering “150 million Americans will be victims of credit card fraud this year.” These statistics underscore the critical need for vigilance.
Recognizing “Tell-tale signs” of a scam is paramount. These include “guarantees of spectacular profits in a short time frame without risk;” requests to “wire money or pay a fee before you can receive a prize;” or “unnecessary demands to provide bank account and credit card numbers, Social Security numbers, or other sensitive financial information.” Even seemingly innocuous requests, such as “those phone calls for donations to the police,” could be a scam. The core message is skepticism toward anything that seems overly optimistic or requires immediate, sensitive data.
Furthermore, individuals should be extremely wary of—and in fact, “run away from”—anyone “pressuring you to make an immediate decision or discouraging you from getting advice from an impartial third party.” If a scam is suspected, the FTC advises searching the “company or product name, along with ‘review,’ ‘complaint,’ or ‘scam,’ through Google or another search engine.” It’s also crucial to “check with your local consumer protection office or your state attorney general” and to “file a complaint with the FTC, too” to help prevent others from falling victim.
3.Many baby boomers plan to continue working past 65, driven by a desire to stay active, financial necessity, or to ‘maximize their Social Security checks,’ yet this intention carries a significant risk of backfiring as life’s unexpected turns can disrupt even the most meticulously laid plans.
Statistics from Fidelity’s 2025 State of Retirement Planning survey indicate that over half of workers plan to continue working part-time indefinitely in retirement, with more older workers gradually phasing into retirement through part-time or flexible hours, reflecting a cultural shift towards extended working lives but also a potential reliance on unsustainable employment.
The primary risk in planning to work indefinitely is the possibility of being ‘forced to stop working and retire early’ due to various reasons, including ‘health-related issues’ for oneself or a loved one, employer-related challenges like ‘downsizing, layoffs and buyouts,’ and the diminishing employability resulting from a failure to ‘keep skills up to date.’
The essential “actionable advice” derived from this potential blunder is to “assume the worst, and save early and often.” While “almost four in 10 workers expect to retire at age 70-plus” and “23% do not plan to retire at all,” citing both financial and healthy-aging reasons, relying solely on this intention without adequate savings is a gamble. Preparing for an earlier-than-expected departure from the workforce through robust savings provides a crucial safety net.
4. **Putting off saving for retirement**
Despite widespread awareness of the importance of retirement savings, a significant portion of the population struggles with adequate preparation. A recent “Northwestern Mutual (2025) study” revealed that “only one in four Americans (25%) who have retirement savings say they have one year or less of their current income saved for retirement.” This figure is particularly concerning for Gen X’ers, many of whom are “approaching retirement,” yet “52% have 3x or less of their current annual income saved.” The disconnect between understanding the need and taking sufficient action is stark.
A core issue is that while many people grasp the concept of saving, they often “have no idea the amount of money they will need to retire comfortably.” Ajay Kaisth, a certified financial planner, notes that “Many people do not start to aggressively save for retirement until they reach their 40s or 50s.” While this later start isn’t necessarily a death knell for retirement dreams, he emphasizes that “they may still have enough time to change their savings behavior and achieve their goals, but they will need to take action quickly and be extremely disciplined about their savings.”
To underscore the urgency, specific savings targets are often cited. According to Dutch Point Credit Union, if you aim to “build a $1 million nest egg by age 65,” assuming an 8% annual interest rate, 2% inflation, and no prior savings, the monthly contributions vary dramatically based on your starting age. Commencing at age 25 requires “$300 a month,” while waiting until 35 demands “$700 a month.” The cost of delay becomes profoundly clear when considering that starting at 45 requires “$1,700 per month,” and at 50, a substantial “$3,000 each month” is needed.
Fortunately, ‘Uncle Sam offers incentives to procrastinators’ through catch-up contributions, allowing individuals aged 50 and over to contribute an ‘extra $7,500 to a 401(k) on top of the standard $23,500′ in 2025, with even higher amounts for those aged ’60 to 63’ up to ‘$11,250,’ and a ‘$1,000’ catch-up for IRAs, providing a vital opportunity to accelerate savings.
5. **Claiming Social Security too early**
The option to start receiving Social Security retirement benefits at age 62 is available, but exercising this option prematurely is a common blunder that can significantly impact lifetime income. Most financial planners strongly advise “holding off at least until your full retirement age (FRA)” before tapping into these benefits. For anyone born after 1959, this means waiting until age 67. The incentive to delay is substantial, making it a critical consideration for retirement planning.
Delaying beyond your FRA can be even more advantageous, with waiting until age 70 often being the optimal strategy. To illustrate, if your “full retirement age…is 67,” claiming benefits at 62 results in your “monthly check will be reduced by 30% for the rest of your life.” This reduction is a permanent penalty for early access. Conversely, by “hold[ing] off,” you can secure an “8% boost in benefits each year between ages 67 and 70 thanks to delayed retirement credits.” There are no additional credits after age 70, making this period the sweet spot for maximizing benefits.
It’s important to recognize that “claiming strategies can differ for couples, widows and divorced spouses,” necessitating a thorough evaluation of individual circumstances and potentially professional guidance. Natalie Colley, a financial analyst, advises, “If you can live off your portfolio for a few years to delay claiming, do so.” She astutely points out the unique value proposition: “Where else will you get guaranteed returns of 8% from the market?” This highlights the substantial, risk-free growth opportunity that delaying Social Security presents, an advantage rarely matched by other investments.
For those who find delaying Social Security challenging due to immediate financial needs, alternative strategies exist. One viable option is to “stay on the job longer, if feasible.” Continuing to work provides income that can bridge the gap, allowing Social Security benefits to grow. Another increasingly popular approach is to “start a side gig to help bridge the financial gap,” leveraging available opportunities to earn “extra cash.” These practical solutions enable individuals to defer claiming and capitalize on the significant long-term benefits of patience.
6. **Borrowing from your 401(k)**
The temptation to take a loan from your 401(k) retirement savings account can be incredibly strong, driven by the thought that “it’s your money.” Many plans permit borrowing, typically allowing five years for repayment with interest. However, financial experts widely agree that “short of an emergency, tapping your 401(k) is a bad idea” and is considered “one of the worst 401(k) mistakes you can make that could tank your retirement.” This seemingly easy solution often comes with severe long-term consequences.
A significant drawback, as highlighted by Meghan Murphy, VP at Fidelity Investments, is that individuals often ‘reduce or suspend new contributions during the period you’re repaying the loan,’ thereby ‘short-changing your retirement account for months or even years and sacrificing employer matches — free money,’ while simultaneously ‘missing out on the investment growth from the missed contributions and the cash that was borrowed.’
Murphy emphasizes exploring all other options before resorting to a 401(k) loan: “is there anywhere else you might be able to borrow from?” She suggests the importance of an emergency fund and, in the case of a medical emergency, considering a “health savings account (HSA) that you might be able to take money from?” Increasingly, employees are drawing from “stock plan options through their employer,” which Murphy notes “there’s not necessarily a penalty associated with it or the requirement that you have to make payment on the loan directly through your paycheck.”
A significant downside to borrowing from a retirement plan is the repayment structure. While typically repaid over five years, “if you were to leave that employer before the loan is paid off, you’re obligated to pay it back in full within 60 to 90 days.” Failure to do so results in it becoming a “taxable distribution,” and “if you’re below the age of 59-1/2, there’s now a 10% tax penalty associated with it.” Compounding this, you “will be paying the interest on that 401(k) loan with after-tax dollars, then paying taxes on those funds again when retirement rolls around,” creating a double taxation scenario.
Before contemplating a 401(k) loan, it is prudent to “explore other loan options.” For instance, “College tuition…can be covered with student loans and PLUS loans for parents.” Major home repairs, while risky, can be financed with a “home equity line of credit (HELOC).” These alternatives, though not without their own considerations, generally offer more favorable terms and fewer long-term detrimental effects on your retirement nest egg compared to prematurely tapping into your dedicated savings.
7. **Decluttering to the extreme**
As individuals age and approach retirement, a natural inclination is to declutter and simplify their lives, often by “getting rid of a lot of the ‘stuff’ they’ve accumulated.” While this can be a thoughtful gesture, aiming to “make it easier for my brother and me down the road when we inherit the home,” it also presents a subtle but significant blunder if not approached with caution. Hasty disposal of certain items, beyond mere junk, can lead to unforeseen complications, particularly concerning important documents.
The critical warning here is to “Be careful about what you throw out in haste.” While sentimental items might be tempting to discard, the real danger lies with records. Certain professionals, including “doctors, dentists, lawyers, and accountants,” are legally “required by law to retain records for years after retirement.” Disposing of these too soon can lead to legal or regulatory issues. This extends beyond professional obligations to personal financial documents that have long-term relevance.
For tax records, the “IRS generally has three years to initiate an audit,” but prudent advice suggests holding onto “certain records, including your actual returns, indefinitely.” This also applies to documents related to the “purchase and capital improvement of your home,” as well as “purchases of stocks and funds in taxable investment accounts, and contributions to retirement accounts (in particular nondeductible IRA contributions reported on IRS Form 8606).”
The rationale for retaining these documents is clear: “All can be used to determine the correct tax basis on assets to avoid paying more in taxes than you owe.” Without proper documentation, heirs might face challenges proving the original cost basis of assets, potentially leading to higher capital gains taxes. Therefore, while decluttering is beneficial, it must be balanced with the imperative to safeguard critical financial and legal paperwork that impacts both current and future financial obligations.
8. **Putting your kids first**
It’s a universal desire for parents to give their children every advantage – education, a dream wedding, a comfortable start in life. While admirable, a significant blunder is footing substantial bills for adult children’s aspirations at the expense of your own crucial savings. This diversion can create a gap in your retirement funds that may be impossible to bridge, potentially leaving you dependent on the very children you tried so hard to help.
Financial experts consistently caution against raiding your retirement nest egg. These funds are sacred. ‘If you’re not prudent now, you might end up being the one moving into your kid’s basement later.’ Instead, explore a wealth of alternative avenues for funding a child’s education.
Parents and their children should investigate 529 plans, scholarships, grants, and student loans. Less expensive in-state schools or community colleges offer excellent academic value. Empowering children to contribute to their own significant life events not only fosters financial responsibility but also protects your retirement security, ensuring both generations can thrive independently.
9. **Buying into a timeshare**
The allure of a timeshare often feels perfectly aligned with retirement dreams, promising endless sunny getaways and the freedom to visit favorite spots. For many embarking on post-work lives, the promise of luxurious, hassle-free vacations can be incredibly tempting.
However, beyond hefty upfront payments, buyers face a significant financial blunder if the full implications aren’t understood, as they encounter escalating maintenance fees and considerable travel costs, turning a dream into a burdensome commitment, with resale being exceptionally difficult due to the market being ‘flush with used timeshares’ and ‘rife with scammers.’
If considering a timeshare or facing remorse, experts advise contacting your management company about resale options. If that fails, list it on established websites like RedWeek.com or Tug2.net, or hire a reputable broker. As a last resort, donating your timeshare for a tax write-off is an option, but always ‘check with your tax adviser’ first.
10. **Avoiding the stock market**
For many approaching retirement, the stock market appears daunting and volatile. Shying away from equities because they seem ‘too risky’ is a common and costly blunder. Prioritizing safety often means forgoing the growth potential the market has historically offered.
While volatility exists, ‘since 1926, stocks have returned an average of about 10% a year,’ significantly outperforming bonds, CDs, and bank accounts. Elizabeth Muldowney, a financial adviser, warns that avoiding stocks shifts your risk to ‘the possibility of your money not keeping up with inflation,’ eroding purchasing power.
For those hesitant about individual stocks, low-cost mutual funds and exchange-traded funds (ETFs) offer accessible diversification. Even in retirement, ‘don’t even think about retiring your stock portfolio,’ advises Fidelity’s Meghan Murphy, as nest eggs ‘need to keep growing to finance a retirement that might last 30 years.’ While growth persists, gradually ‘ratchet down risk as you age.’
11. **Ignoring long-term care**
We all hope for robust health in retirement, but the ‘inevitable toll on mind and body’ eventually impacts everyone. Ignoring the very real possibility of needing long-term care is a critical oversight, as even healthy retirees can succumb to illness or age-related needs.
The costs of long-term care can be a severe ‘sticker shock.’ A Place For Mom’s 2025 data shows assisted living at ‘$5,190 per month,’ memory care at ‘$6,200 per month,’ and in-home care at ‘$30 per hour (for 20 hours per week).’ These figures illustrate how quickly even a substantial nest egg ‘can be wiped out in a hurry,’ especially since Medicare ‘doesn’t cover most of the costs.’
While pricey, long-term care insurance can cover some costs. In 2024, a 65-year-old single male paid an average annual premium of ‘$1,700’ for $165,000 in coverage. Another strategic option is a Qualified Longevity Annuity Contract (QLAC), where an upfront lump sum provides a steady, guaranteed income stream from an advanced age (typically 85), protecting against outliving savings.
Navigating the path to a secure retirement is a complex journey with potential missteps that can derail even the most diligent efforts, and by understanding these common pitfalls – from prioritizing children to neglecting crucial planning, overlooking market growth, underestimating long-term care costs, or failing to envision a life beyond work – you can make informed decisions, embrace expert advice, and vigilantly manage the details to achieve the golden and serene retirement you deserve.
