5 Retirement Planning Mistakes
Planning for retirement is one of the most important financial undertakings in your life. Yet even seasoned professionals make retirement planning mistakes that can derail decades of savings. The good news? These pitfalls may be avoided with the proper insight and a proactive approach.
5 Retirement Planning Mistakes
#1: Underestimating healthcare costs
Healthcare is one of the most underestimated expenses in retirement, and one of the hardest to control. Many assume Medicare will cover everything, but it doesn’t include long-term care. Out-of-pocket costs for premiums, prescriptions, and supplemental insurance can add up quickly.
What to Do: If you’re still working and enrolled in a high-deductible health plan, look to contribute to a Health Savings Account (HSA). It’s one of the most tax-efficient ways to prepare for healthcare expenses in retirement — contributions are tax-deductible, growth is tax-free, and withdrawals for qualified expenses are tax-free.
#2: Ignoring tax diversification
Too often, retirement savers focus solely on growing their balance without considering the tax impact of withdrawing those funds later. Relying entirely on tax-deferred accounts, such as 401(k)s or traditional IRAs, can create a future tax trap, especially when required minimum distributions (RMDs) become applicable.
What to Do: Diversify your savings across three tax “buckets”: tax-deferred (401(k), traditional IRA), tax-free (Roth IRA, HSA), and taxable (brokerage accounts). This to manage your income and tax bracket in retirement. A financial advisor can help you assess your current mix and reallocate contributions accordingly.
#3: Not revisiting the plan
A retirement plan isn’t a one-time task — it’s a dynamic process that should evolve with your life. Ignoring your plan for five or ten years can leave you vulnerable to missed opportunities or avoidable risks.
What to Do: Schedule a dedicated time—at least once a year—to review your retirement projections, investment allocation, and cash flow strategy. A midyear check-in can be especially helpful. During this review, adjust for any significant life events, career changes, or shifts in market conditions. An annual advisor meeting can help keep your plan aligned and forward-looking.
#4: Misjudging retirement age or lifestyle
Many people plan to retire at a specific age, like 65 or 67, but life doesn’t always follow a script. Health changes, job loss, or caregiving responsibilities can accelerate your timeline. At the same time, people often underestimate their spending in the early years of retirement, when travel and lifestyle expenses peak.
What to Do: Run a few “what-if” scenarios using conservative assumptions, such as retiring earlier than expected or spending more in your first 10 years. Flexibility is key; your plan should be able to adapt to both opportunities and challenges.
#5: Neglecting withdrawal strategy
The order you draw from retirement accounts can significantly impact how long your money lasts and how much you pay in taxes. Without a strategy, many retirees withdraw in a way that unintentionally triggers higher tax brackets, Medicare premium surcharges, or costly RMDs down the line.
Things to discuss with an advisor: Map out a tax-efficient withdrawal plan. Often, this means drawing from taxable accounts first, then tax-deferred accounts, and saving Roth assets for last. In lower-income years—such as the period between retirement and age 73—consider partial Roth conversions to smooth out taxes over time. Coordinating withdrawals with your overall tax picture can be a meaningful way to add value to your retirement strategy. Each mistake is common—but entirely avoidable with foresight and planning. As advisors, our role isn’t just to build a plan—it’s to help you stay ahead of the curve. Retirement is a decades-long journey, and the decisions you make today may expand your options, reduce your tax burden, and give you peace of mind tomorrow.
This content is for informational and educational purposes only and should not be construed as individualized advice or a recommendation for any specific product, strategy, or course of action. Brighton Jones, its affiliates, and employees do not provide personalized investment, financial, tax, or legal advice through this communication. This material is not intended to, and does not, create a fiduciary relationship under ERISA or any other applicable law. For individualized advice tailored to your specific circumstances, please consult with your adviser.
