Retirement is exciting- until it isn’t.
For many people in their late 50s and 60s, the idea of stepping away from work feels like freedom. You look at your retirement accounts, picture your “someday,” and think, Maybe it’s time. But retirement planning isn’t just a date on the calendar- it’s a long-term income plan, a tax plan, a healthcare plan, and (if we’re being honest) a purpose-and-lifestyle plan.
As a fiduciary, financial planner in St. Paul, I’ve seen a handful of retirement planning mistakes show up again and again. They’re common, understandable, and avoidable- with a little planning and a clear-eyed look at the trade-offs.
Below are four key considerations to help you build a more confident retirement strategy.
1) Don’t Quit Too Soon
After decades of working, it’s tough not to dream about “being done.” And when work gets stressful, it’s easy to let one bad Monday turn into a resignation letter.
But retiring early has a double impact:
- You shorten your runway for saving and benefits (fewer years of earnings, fewer years of employer benefits, fewer years to add to your portfolio).
- You lengthen the time your money must last (often by 25–35 years, sometimes longer).
This is why retirement planning should be less about “Do I have a big number?” and more about “Do I have a sustainable income plan?” Before you retire, it helps to test your plan against real-world variables like inflation, market volatility, healthcare costs, and taxes.
Practical next step: If you’re within 5 years of retirement, consider running a “work one more year” scenario. Sometimes one additional year of earnings can reduce pressure on your portfolio for many years.
2) Don’t Rely Too Much on Hope (Especially With Investments)
In retirement, the investment question changes. During your working years, market dips are frustrating- but you’re typically still saving and buying into the market. In retirement, you’re often withdrawing, which means poor timing can hurt more than people expect.
This is where sequence-of-returns risk comes in: if markets drop early in retirement while you’re taking distributions, the portfolio may have less opportunity to recover, even if markets rebound later.
That doesn’t mean retirees should avoid growth or hide in cash. It means your investment strategy should match your income strategy. A thoughtful retirement investment plan often includes:
- A clear withdrawal approach (what accounts first, and why)
- Liquidity planning (cash reserves for near-term spending needs)
- A diversified portfolio aligned with risk tolerance and time horizon
Practical next step: Ask yourself, “If markets fall sharply this year, what is my plan for the next 12–24 months of expenses?” If the answer is “hope,” it’s time for a better system.
3) Don’t Cash In Too Early (Social Security and Retirement Accounts)
Few retirement decisions are as permanent as when to claim Social Security. Many people start benefits at 62 because it feels like they’re finally getting something back. Others begin IRA withdrawals as soon as they can, without a coordinated plan.
The challenge is that early decisions can create long-term consequences:
- Claiming Social Security early can reduce lifetime monthly benefits.
- Taking withdrawals without a tax strategy can increase taxes, Medicare premium surcharges, or make future required distributions more painful.
- Spending down accounts in the wrong order may shrink flexibility later.
Your ideal claiming strategy depends on your health, marital status, income needs, and how the rest of your retirement income plan is structured. There’s no one “best” age for everyone, but there is a best approach for your situation.
Practical next step: If you’re within a few years of claiming Social Security, consider coordinating it with tax planning, portfolio withdrawals, and your intended retirement date, so you’re not forced into a decision later.
4) Don’t Spend Too Much, Plan Too Little, and Enjoy Too Late
Retirement spending rarely looks like a straight line.
Some retirees spend more in the early “go-go years” (travel, hobbies, helping family) and then slow down later. Others do the opposite—spending very little because they’re afraid, then realizing too late they missed healthy years they could have enjoyed.
Two common pitfalls show up here:
- Overspending early without structure. Freedom feels great, but a portfolio needs a withdrawal plan that accounts for inflation, market volatility, and longevity.
- Underspending due to fear or lack of purpose. If you’re saving every penny but not living, that’s not a win either.
Good retirement planning isn’t about deprivation. It’s about aligning money with what matters, so you can spend confidently- and sustainably.
Practical next step: Build a retirement “paycheck” plan—one that maps spending to reliable income sources (Social Security, pensions, cash reserves, and portfolio withdrawals) and includes room for fun.
How a Fiduciary, Retirement Plan Can Help
A solid retirement plan doesn’t rely on guesswork. It’s a written strategy that ties together the key moving parts:
- Retirement income and withdrawal planning
- Investment risk managementand diversification
- Social Security timing analysis
- Tax-aware distribution strategies
- Healthcare and Medicare planning considerations
- Estate planning coordination (with your attorney)
If you’re nearing retirement (or already retired and want a second opinion), working with a fiduciary financial planner can help you stress-test decisions before they become regrets.
If you’d like help building or refining your retirement plan, schedule a conversation with our office. We can review your current strategy, identify potential gaps, and outline clear next steps based on your goals.
Important disclosure: Dunncreek Advisors does not provide legal or tax advice, and this article is not intended to do so. Please consult the appropriate professionals regarding your specific situation.
FAQs
1) How do I know if I can retire comfortably?
A retirement date should be supported by an income plan, not just an account balance. A good plan tests your spending needs against market volatility, inflation, healthcare costs, and taxes. If you haven’t stress-tested those variables, it’s worth doing before you give notice.
2) Should I pay off my mortgage before retirement?
It depends on your cash flow, interest rate, tax situation, and how you prefer to manage risk. Some retirees value the simplicity of being debt-free, while others prefer keeping liquidity and investing strategically. The key is to evaluate the trade-offs in the context of your full retirement income plan.
3) When should I start Social Security?
There isn’t one perfect age for everyone, because claiming decisions are personal and interconnected with taxes, longevity expectations, and other income sources. Married couples, in particular, may benefit from coordinating benefits to manage survivor income risk. A personalized analysis can help you understand the long-term impact of different claiming ages.