9 Money Mistakes That Could Wreck Your Retirement Plan

Written by C. James on updated
An older man sits on a couch, reading and looking concerned at papers in his hand, while an older woman stands behind him with a supportive hand on his shoulder. A laptop and plants are on the table nearby.

Retirement is an important chapter of life, but there are so many financial pitfalls that retirees can make. If you fail to save enough for your retirement, this chapter could be filled with stress and anxiety as opposed to relaxing days spent traveling or in the garden. Take a look at these common money mistakes that can affect retirement, and be sure to avoid them as you prepare to transition out of the workforce.

1. Failing To Plan

An older couple sits at a table, reviewing documents together. The man wears a blue sweater and holds papers, while the woman in a striped shirt points at a sheet. A tablet, notebook, phone, and mugs are on the table. They are in a bright, modern kitchen.
LaylaBird/istockphoto
LaylaBird/istockphoto

Benjamin Franklin declared, “If you fail to plan, you are planning to fail.” The 18th-century quote still holds up to this day, especially when it comes to retirement planning. Simply thinking that your retirement will work itself into a positive situation without putting any planning into it will likely end up leaving you in a bad position.

2. Not Saving Early Enough

Hands resting on a glass jar labeled "savings," filled with U.S. dollar bills, including a visible $50 bill. The jar has a metal clasp lid and sits on a dark surface.
Anastasiia Yanishevska/istockphoto
Anastasiia Yanishevska/istockphoto

If you don’t start saving for retirement in your best wage-earning days, then you will be scrambling later in life. Only 39% of adults who are saving for retirement started in their 20s, according to a study from Morning Consult. Slightly more than 25% of Americans in their 30s begin saving for retirement.

According to the Insured Retirement Institute. most workers over the age of 40 don’t have sufficient retirement savings and aren’t setting aside enough to catch up. In short: Save as much as you can as early as you can.

3. Retiring at the Wrong Time

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AscentXmedia/istockphoto
AscentXmedia/istockphoto

Retiring at the optimal time can be tricky since you don’t have a crystal ball to tell you the future. If you retire too early and live longer than anticipated, you could run out of funds. Plus, retiring at a younger age could result in lower Social Security benefits.

Conversely, you could retire too late and forfeit all of your work-free golden years. Knowing the status of both your savings and your health will help you make an informed decision as to when retirement is right for you.

4. Underestimating Medical Expenses

A close-up of a medical bill and a stethoscope. The bill lists various charges, such as an emergency care room fee of $10,017.00 and emergency services totaling $6,405.00, with an overall amount due of $36,027.35.
DNY59/istockphoto
DNY59/istockphoto

Speaking of health, you need to be realistic about possible health catastrophes and the potentially exorbitant costs related to your issues. Medicare doesn’t cover long-term care, most dental care, dentures, eye exams related to prescribing glasses, routine foot care, and hearing aids and exams.

5. Letting Your Emergency Fund Dwindle

A glass jar labeled "Emergency Fund" filled with cash is tipped over on a wooden table, with U.S. bills scattered around. Nearby are a pen, a calculator, and a blue notebook.
designer491/istockphoto

In retirement, there’s no worry about losing your job and having to dip into an emergency fund to make ends meet. But having cash available in the case of emergencies is still incredibly important. Retirees with a fixed income should still have an emergency fund in case of, well, emergencies, so that they don’t force a portfolio withdrawal or take on a short-term loan with high interest.

6. Ignoring Inflation

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lucigerma / istockphoto
lucigerma / istockphoto

Inflation could cause your savings to be significantly worth less than you anticipated. The Federal Reserve expects a 2% inflation rate each year. However, higher inflation rates can catch people off guard. If prices for health care, food, and energy spike, the excess costs can blow up your budgeted retirement savings and damage your purchasing power in the future.

7. Overspending

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choochart choochaikupt/istockphoto
choochart choochaikupt/istockphoto

A smart retirement plan will have a set budget, but if you veer off that economic program, then it can demolish your savings. Taking up expensive hobbies or pricey vacations may sound perfect for retirement, but these expenses can drain your savings quickly.

8. Hiring the Wrong Financial Adviser

A woman, likely a financial advisor, is seated with a senior couple in a bright room with a stunning mountain view, indicative of a home in Slovenia. They are engaged in conversation, with documents laid out on the table, pointing to a discussion about pension insurance. The advisor is presenting information, while the couple listens intently, considering the options for their retirement planning.
Georgijevic/istockphoto
Georgijevic/istockphoto

If you employ the advice of an incompetent financial advisor, then your retirement planning could suffer. Be sure to ask around for recommendations, read reviews, and thoroughly vet the person you trust with your money.

9. Taking Too Much Risk

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kontrymphoto/istockphoto
kontrymphoto/istockphoto

If you employ high-risk/high-reward investment strategies in your retirement and they fail, you won’t have the consistent income to overcome the financial losses. Be strategic about your investments, even if that means playing it safe.

Looking for more retirement advice?

We’ve got you covered. Be sure to read How Much You Need to Retire in Every U.S. State in 2025, along with 5 Warning Signs That You’ll Run Out of Money in Retirement. Finally, make sure to check out How Long Will My Money Last? The Question All Retirement Seekers Must Ask.