9 Retirement Mistakes We See Most (And How to Avoid Them)

If you’re within 10 years of retirement—or you’ve recently retired—there’s a good chance you’ve asked yourself some version of this: “Am I making the right moves… or am I missing something big?”

We hear that a lot from Rochester, MN retirees and Mayo Clinic employees who did a great job saving, but don’t want a preventable mistake to create unnecessary taxes, stress, or income surprises later.

The good news is that many retirement mistakes are avoidable once you know where the traps tend to be. Here are nine of the most common ones, explained in plain English.

Taking Social Security too early without running the numbers

One of the most common retirement mistakes is claiming Social Security early simply because it’s available.

For some people, claiming at 62 is the right move. But many people do it without understanding the tradeoffs: claiming early can permanently reduce your monthly benefit. On the other hand, delaying benefits past full retirement age can increase your monthly benefit—up to age 70 (after that, the increase stops).

The key isn’t “always delay” or “always take it early.” The key is coordinating Social Security with the rest of your income plan—pensions, portfolio withdrawals, part-time work, and taxes—so you’re not accidentally creating a tax problem later.

Not planning for taxes before you start pulling income

Another major retirement mistake is assuming your taxes will automatically be lower once you stop working.

In reality, many retirees have most of their savings in pre-tax accounts like traditional 401(k)s and IRAs. Every dollar you pull from those accounts can add to your taxable income. That matters because it can also increase how much of your Social Security benefit is taxable (in some cases, up to 85% of benefits may be taxable depending on your income).

Tax planning in retirement often means looking at which “bucket” you’re pulling from (taxable, tax-deferred, Roth) and when—especially in the early retirement years before required distributions begin.

Taking too much or too little investment risk

We get this question constantly: “How much risk should I take at my age?”

There’s no one-size-fits-all answer. The right risk level depends on how much you need your portfolio to do for you.

If your withdrawal need is modest, taking “stock market-level” risk might be unnecessary. But going too conservative can create a different problem: your income may drop when interest rates change, and your portfolio may struggle to keep up with inflation over a long retirement.

A good rule of thumb is to take the amount of risk you need to support your plan—no more, no less—while keeping your sleep-at-night comfort in mind.

Treating the 4% rule like a guarantee

The 4% rule is a helpful starting point. But it’s not a promise.

It comes from historical research that looked at how often certain withdrawal strategies would have lasted over rolling retirement periods. “Success” depends on the time period, the portfolio mix, and what markets do next—not what they did in the past.

If you’re using the 4% rule, the real retirement mistake is using it as a set-it-and-forget-it formula. A strong retirement plan adjusts over time—especially after big market moves.

Ignoring sequence-of-returns risk early in retirement

Sequence-of-returns risk is a fancy phrase for a simple idea: bad market returns early in retirement can do more damage than bad returns later.

Why? Because you’re withdrawing while the portfolio is down. That combination can permanently reduce the amount of money left to recover when markets improve.

This is why many retirees benefit from having a plan for “where withdrawals come from” in down markets—so you’re not forced to sell long-term investments at the worst time.

Forgetting required minimum distributions

Required minimum distributions (RMDs) can sneak up on people.

For many retirees today, RMDs begin at age 73, though the exact age can depend on your birth year, and the IRS rules allow a first RMD delay option into the following year in some cases.

Here’s the retirement mistake: retiring at 60 or 62, living mainly off a pension or cash savings, and letting large pre-tax retirement accounts grow untouched for years. That can increase future RMDs and potentially push you into higher tax brackets later—right when you’d prefer more control.

Planning ahead may include strategies like thoughtful IRA withdrawals in lower-tax years, Roth conversions (when appropriate), or intentionally filling a tax bracket while you still have room.

Misunderstanding Medicare premium “income rules”

Many people know Medicare starts at 65. Fewer people know their Medicare premiums can be influenced by income.

High-income years can trigger an additional premium surcharge called IRMAA (Income-Related Monthly Adjustment Amount). IRMAA is generally based on your modified adjusted gross income (MAGI) from two years prior.

This is a common retirement mistake because it’s easy to accidentally create a high-income year at the wrong time—like large IRA withdrawals, Roth conversions, or big capital gains—right before Medicare pricing is being evaluated.

The goal isn’t to avoid income. The goal is to plan the timing so you don’t get surprised.

Not having a clear retirement cash flow system

In retirement, cash flow becomes the steering wheel.

A big mistake is “winging it”—taking money from whatever account feels easiest that month, without a coordinated plan. That can lead to unnecessary taxes, missed opportunities, and stress when markets are volatile.

A strong system answers a few basic questions clearly: What income sources are dependable? What is flexible? Which accounts should fund which goals? And what changes if markets drop or expenses spike?

Even a simple written plan is better than guessing.

Not stress-testing the retirement plan

The last retirement mistake is assuming your plan only needs to work in a “normal” year.

Real life is messy. Cars break down. Roofs leak. Adult children may need help. Healthcare costs can surprise you. Markets can stay down longer than expected.

Stress-testing means asking: if several things go wrong at once, do you have enough liquidity and flexibility? And if your withdrawal rate is higher than expected for a period of time, what’s the adjustment plan?

When you stress-test early, you can make calm decisions. When you don’t, you’re forced into urgent ones.

A simple next step

If you’re reading this and thinking, “I’m not sure where I stand,” you’re not alone. Most people aren’t making retirement mistakes because they’re careless—they’re making them because retirement has a lot of moving parts.

A helpful next step is to review your income sources, your tax picture, and your withdrawal strategy together—especially if you’re within a few years of retirement or nearing Medicare age. That’s often where the biggest “quiet” risks show up.

Disclosures

Fortress Financial Group LLC (“FFG") is a registered investment advisor. Advisory services are only offered to clients or prospective clients where FFG and its representatives are properly licensed or exempt from licensure.

This content is provided for informational purposes only and should not be construed as legal, tax, or investment advice. Individual situations vary, and readers should consult with a financial, tax, or legal professional before making any financial decisions.

Any example provided is hypothetical and for illustrative purposes only. It does not represent any specific product or investment. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal.