Retirement planning seems straightforward: save money, invest wisely, retire comfortably. But the reality is far more complex. Small missteps today can compound into major problems decades later. Here are the 7 most common—and costly—retirement planning mistakes to avoid.
1 Underestimating How Long You'll Live
The Mistake: Planning for retirement to last 15-20 years when you might live 30-40 years post-retirement.
Reality Check: A 65-year-old couple has a 50% chance one spouse lives to age 90, and a 25% chance one lives to 95. That's potentially 30 years of retirement to fund.
✅ Solution: Plan for longevity. Consider annuities with lifetime income guarantees to eliminate the risk of outliving your savings.
2 Ignoring Inflation's Long-Term Impact
The Mistake: Assuming $50,000/year will have the same purchasing power in 20 years.
Reality Check: At 3% annual inflation, $50,000 today will only buy $27,600 worth of goods in 20 years. Your income needs to grow.
✅ Solution: Build inflation protection into your plan with COLA riders on annuities, dividend-growth stocks, or phased income strategies.
3 Taking Too Much Market Risk Near Retirement
The Mistake: Keeping 80-90% in stocks at age 62 and experiencing a 30% market crash right before or after retirement.
Why It's Devastating: Sequence-of-returns risk means early losses combined with withdrawals can permanently damage your portfolio. A $500K portfolio dropping to $350K while you're withdrawing $30K/year may never recover.
✅ Solution: Shift 30-50% of retirement assets into principal-protected vehicles (fixed annuities, bonds, FIAs) 5-10 years before retirement.
Avoid These Mistakes in Your Plan
Get a personalized retirement income strategy from licensed specialists
Take Free Survey4 Not Having a Withdrawal Strategy
The 4% rule is outdated. You need a dynamic withdrawal strategy that adapts to market conditions, tax efficiency, and required minimum distributions (RMDs).
✅ Solution: Work with a specialist to create a tax-efficient withdrawal sequence.
5 Claiming Social Security Too Early
Claiming at 62 instead of 70 can reduce your lifetime benefits by 30-40%. For a couple with longevity, this could mean losing $200K+ in income.
✅ Solution: Use annuity income or savings to bridge the gap and delay Social Security to age 70.
6 Failing to Plan for Healthcare Costs
The average 65-year-old couple will spend $315,000 on healthcare in retirement (Fidelity, 2023). Long-term care alone can cost $100K+/year.
✅ Solution: Budget for Medicare premiums, Medigap, and consider long-term care insurance or hybrid annuities with LTC riders.
7 Not Diversifying Income Sources
Relying solely on Social Security and portfolio withdrawals leaves you vulnerable to market downturns and sequence risk. You need multiple income streams.
✅ Solution: Create a "retirement income floor" with guaranteed sources (Social Security + annuity income) covering essential expenses.
Build a Mistake-Proof Retirement Plan
Atlas Annuities helps you avoid these pitfalls with personalized strategies that protect your income, grow your savings, and provide peace of mind.