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Don’t Make These Four Retirement Mistakes

Picture of Randall E. White

Randall E. White


Creating a strong retirement plan – and avoiding retirement mistakes – are critical steps in planning for your future. Of course, unless you’re a financial professional, there may be a lot you don’t know. After 30 +years of working personally with retirees, I want to share four common errors to avoid so you can feel confident about the plan you’ve got in place.

#1. Not Maximizing Social Security

According to recent research put out by the Social Security Administration, 50% of married couples and 70% of unmarried individuals receive 50% or more of their income in retirement from Social Security. So, for many retirees, Social Security is their lifeline to financial security. Despite this, many people are still failing to develop a Social Security strategy with intention. In fact, research shows that 22% of retirees regret claiming their benefits when they did.

When and how you begin taking your Social Security benefits can have a huge impact on the financial reality of your retirement. If you begin claiming your benefits too soon, you risk losing out on money that you could have had if you had waited just a few years. So, be deliberate and smart when planning out your Social Security strategy. Do your research and seek out guidance from a professional who can help walk you through all of your options. If you’re married, consider how your decisions may impact your spouse and vice versa.

#2. Failing to Put a Long-Term Healthcare Plan in Place

As modern medicine continues to develop and life expectancies rise, more retirees are finding themselves in need of some form of long-term healthcare. According to the U.S. Department of Health and Human Services, someone who is turning 65 today has a 70% chance of needing long-term healthcare services at some point in their future. It’s not enough to assume that your spouse or your children will be around or able to take care of you. Even if they are, consider the significant burdens they might face physically, emotionally, or financially in order to care for all your needs. From a financial standpoint, in particular, healthcare costs are continuing to rise.

Luckily, there is an abundance of options and resources that you can utilize to help make long-term healthcare affordable and accessible for you. Whether that’s purchasing long-term-care insurance, retirement life insurance, or taking advantage of fixed-indexed annuities, there are plenty of vehicles available to help support you. What’s important is that you take the time now to get a plan in place so that when the time comes, you’ll be prepared and able to support yourself and your needs.

#3: Having too Much Risk in Your Portfolio

Along with Social Security benefits, many retirees turn to the money that they’ve invested to help support their lifestyle in retirement. If this is part of your retirement plan, then it’s crucial that you’re smart about managing and balancing your portfolio. When you’re a young investor, you have the freedom to take on more risk when investing because you have decades ahead of you to make up for any volatility the market may experience. However, as you near retirement, and especially once you’ve retired, you don’t have that same sort of freedom. Instead, you’ll be taking money from shrinking accounts which can seriously reduce the longevity you thought you had in your portfolio.

If the market experiences a correction early in your retirement or just before you get there, your financial stability is at risk. This is because retirement age is typically when your accounts are at their highest balances, meaning your exposure to major loss is at its greatest. And even though the market may recover, there’s a good chance you won’t have time to fully recover with it. That’s why it’s so important to regularly rebalance your portfolio to ensure that you’re taking on an appropriate amount of risk and reducing your exposure to market volatility depending on your age.


At TriCapital, we use a proprietary system to determine the proper allocation between fixed income and stock for each client so that we are never faced with having to liquidate stocks for income at times when they are down significantly.

#4: Leaving Your IRA Dollars for Your Heirs

By their very nature, Individual Retirement Accounts (IRAs) are meant to be exhausted throughout the account owner’s lifetime. This is why, even if you don’t want or need the money, the IRS makes you take out a required minimum distribution (RMD) each year once you reach age 72. But even with the RMDs, some retirees still have significant amounts of money leftover at the end of their lives and decide to leave the money behind for their heirs.

While this seems great in theory, current tax laws make this a less than ideal situation for those that inherit IRA accounts. Your heirs will have only 10 years to empty the account, and they’ll be required to pay taxes depending on the tax bracket that they’re in at the time of the withdrawals. If they’re in their highest-earning years, this could end up being a significant amount.

If you have savings socked away in tax-deferred accounts that you know you’ll be leaving for loved ones, you may want to consider ways that you can make the inheritance more tax-friendly. A great option is to do a Roth IRA conversion. While you’ll be taxed on the money that you’re taking out of your IRA, you’ll be able to minimize the tax burden for your heirs in the future. Additionally, that money will be available to you tax-free should you need it for your own purposes.

There are other ways that you can go about lowering the tax burdens that come with an IRA, so you might benefit from talking with a qualified financial advisor to determine what the right course of action is for your unique situation.


Building a Strong Retirement Plan

Retirement planning requires you to juggle multiple moving parts, making it a complex endeavor. Retirement mistakes like those mentioned above only add to the challenge. As you’re planning and working towards retirement, it’s important to remember that knowledge is power. Take time to educate yourself and talk with a professional about your plans and where you may be falling short so that you can get on track as soon as possible.

At TriCapital Wealth Management, we recognize how hard you’re working to build the retirement of your dreams and our team of professionals is here to help. We can provide the resources and support that you need to feel confident that your long-term financial plan will be effective so that you can live out the retirement of your dreams. If you feel that you would benefit from a conversation about your retirement plan, please contact us today.

Securities offered through Triad Advisors, LLC, member FINRA/SPIC. Advisory services offered through TriCapital Wealth Management, Inc. TriCapital Wealth Management, Inc. is not affiliated with Triad Advisors, LLC.

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