Five common retirement planning mistakes to avoid 

1 min readLast updated January 23, 2024by Rachel Carey

Everyone makes mistakes. But as you edge closer to retirement, financial mishaps can be costly. In fact, making the wrong financial move could be the difference between living out your dream beachside retirement and spending more years in the workforce.

Here are five common mistakes people make as they get close to retirement and how to avoid them:  

1. Not considering your taxes  

Poor tax planning can have a detrimental impact on your retirement income.   

From the age of 72 or 73, if you reach age 72 after Dec. 31, 2022, you must start taking the required mandatory distribution (RMD) from your traditional retirement plans each year (except Roth IRAs). This income is then taxed.  

If the bulk of your savings are in these plans or you believe you will be in a higher tax bracket come retirement, it might make sense to convert some of your money into a Roth IRA. By doing this, you will pay taxes on the amount now and none when you eventually withdraw the money.   

You can also do this yearly, boosting your retirement income as you get closer to this next chapter.   

It’s also important to factor in your location here too. If you plan to relocate for retirement, you need to look at different state taxes. Retirees usually aim for pension-friendly states that won’t be too expensive to call home. Florida, for example, boasts zero income, inheritance, or estate taxes, making it a popular retirement destination.   

2. Not having a financial plan  

A financial plan takes stock of your incomings and outgoings. It enables you to define your goals and determine the steps for achieving them.   

With only 21 percent of consumers feeling confident about retirement planning, according to the Unbiased 2023 Financial Confidence Survey, financial planning could provide some desperately needed reassurance.   

Establishing a financial plan for both before and during retirement is the best place to start. Consider when and where you plan to retire, your general health, and the lifestyle you want to lead. This will help you work out how much you need to set aside so you can start figuring out how to get there.    

A good financial plan gives you something to work towards. You can regularly review it and make adjustments when life throws you curveballs, which it inevitably does from time to time. Knowing your future goal and what steps you must take to get there keeps you in control of your current finances.    

3. Not getting a financial advisor  

The closer you get to retiring, the more seriously you should take it.   

With rising costs making life more difficult for so many, seeking expert help to make your biggest financial decisions has never been more important, especially when making such a huge personal and financial transition. It’s during these challenging times that financial advice often proves most valuable.   

An excellent place to start is Unbiased. Our personal finance platform empowers you to make confident, competent financial decisions when it comes to your retirement – regardless of where you are in the process. You get paired with an independent SEC-regulated financial advisor who can work with you to start planning your financial future.   

Speaking to an expert in smoothly moving into retirement can be invaluable. First, they will take the time to learn about your retirement goals and where you currently stand. From here, they will work with you to create a tailored plan and review it regularly to ensure that it remains on track so you can live out your dream retirement lifestyle.   

4. Not considering your long-term health  

We’ve all heard the phrase, “Your health is your wealth,” and in retirement, this couldn’t be truer.   

According to the Fidelity Retiree Health Care Cost Estimate, an average retired couple aged 65 in 2022 needed approximately $315,000 saved (after tax) to cover health care expenses in retirement.   

Healthcare costs are a substantial financial challenge in retirement. And while there are options – private insurance, Medicare for those over 65, or self-insuring (setting aside money to pay for care) – deciding which route you will go down as early as possible is key.   

Unfortunately, getting sick or needing some form of healthcare is expensive. So, with ailments, illnesses, and injuries increasing with age, it’s best to develop a long-term plan that works for you.   

5. Not taking advantage of your company match  

If your company offers a 401(k) or a 403(b), opt-in.   

This is a great way to lower your taxable income while also putting away money for the future. Some companies also offer supplemental plans like a Supplemental Executive Retirement Plan (SERP) in addition to standard 401(k) matching."

With many 401(k) plans, your employer will match your contribution. This is usually a percentage of your salary. For example, if you contribute 6 percent, your employer might match 3 percent. How much your employer matches will vary from employer to employer. However, regardless of the amount, this match is essentially free money.   

It is worth noting the IRS has set contribution limits for an employee's retirement plan from both the employee and employer. For example, in 2023, the total contribution to accounts in plans maintained by one employer cannot exceed $66,000 ($73,500 including catch-up contributions).  

Want guidance when it comes to your retirement planning? At Unbiased, we empower you to make confident financial choices, tell us what you need, and we’ll connect you to trusted, tailored, and timely advice.

Senior Content Writer

Rachel Carey

Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.