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5 Retirement Mistakes to Avoid Before and During Retirement

Writer: David Gearhart
David Gearhart
23 minutes ago
3 min read

Retirement Mistakes to Avoid

People reach many financial milestones throughout life: buying a first car, buying a first home, eliminating debt, and more. The biggest, and by far the most complex, is retirement. When it comes to retirement planning, there is no one-size-fits-all formula. Everyone’s situation is different, and often changes throughout their lives. However, we see several common mistakes that you should avoid to build the strongest financial foundation for retirement.

 

Waiting Too Long to Begin Planning

One of the biggest and most common retirement mistakes is waiting too long to start planning. Often, we hear about issues after they have already started, when planning could have easily prevented them. A well-thought-out plan for the future can help alleviate issues and stress in retirement before they come up, allowing you to enjoy what you’ve worked so hard for!

 

Settling for Investment Management Only

Investments are a key point of retirement, but they are far from the only consideration. Optimizing retirement involves much more than investments, including tax-saving strategies, asset location, risk-reduction strategies, and more. Hiring an advisor who focuses only on investments can cost hundreds of thousands in lifetime taxes and expenses that simple planning could easily avoid.

 

Not Considering Taxes

The only two certainties in life are death and taxes. For better or worse, taxes are prevalent throughout your working life and, unfortunately, do not disappear in retirement. Because taxes are so closely tied to financial planning, I earned my Enrolled Agent designation to better understand tax law and provide better advice.

 

Oftentimes, taxes have a snowball effect. The more taxable income you have, the fewer credits you are eligible for, the fewer deductions you can take, the less you are eligible to itemize for, and so on. It can also lead to more Social Security being taxed. All of this then creates even more taxable income for you, and the cycle starts over again. An improper tax strategy can cost you a lot, especially when some strategies can easily avoid it! This is especially harmful when it comes to RMD age and IRMAA issues that could arise.

 

Risk Tolerance vs. Capacity

Another possible downfall of a solid retirement plan is the difference between risk tolerance and risk capacity (also called risk ability). Risk tolerance refers to how much risk you feel comfortable taking with your investments, while risk capacity refers to how much you should take. When we see these issues, they usually fall on opposite sides of the spectrum. On one hand, you may have a very high tolerance for risk, but your capacity should be lower due to having to live off of that money in retirement. A highly aggressive investment could take a huge downturn in a bear market, forcing you to realize a great loss to cover your living expenses. On the flip side, you may have a very low tolerance for risk when in reality you should have more. Your investments won’t grow nearly as much as you would need them to pull from them through retirement, which may cause you to outlive your money.

 

Emotional Investment Decisions

Emotional investment decisions can have severe adverse effects on a retirement plan. Your investments are where most retirees draw part of their monthly cash flow, and an emotional decision could greatly reduce the pool you draw from. As Dave Ramsey always says, the only people who get hurt are the ones who jump off the rollercoaster. A good investment portfolio should be designed to weather all storms based on your unique situation.

 

Emotional investment decisions can show up in many ways. During market downturns, you may get scared of losing everything and sell your portfolio for cash. Or perhaps, there is a new company that you want to invest a large portion of your portfolio in. But concentrating a large share of your portfolio in one company adds risk that’s more likely to hurt your retirement than help it.

 

Retirement planning involves much more than simply saving money or choosing investments. It requires thoughtful planning across taxes, investments, and risk management.

Avoiding these common mistakes won't eliminate every challenge retirement may bring, but it can help reduce them and minimize stress through retirement.

 

If you're approaching retirement or simply want to make sure your current plan is on the right track, reviewing your strategy today can make a meaningful difference in the years ahead! Feel free to schedule an appointment with one of our advisors here.

Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

​

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

​

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

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Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

​

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

​

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

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