When I was a kid, retirement seemed simpler. People worked for a large employer, reached a pension milestone, retired with a dependable income and healthcare benefits, and spent their time golfing, fishing, or traveling.
Today, retirement planning is more complicated for many families. Employer pensions are less common in the private sector, more people rely on personal retirement savings, and healthcare expenses require careful planning.
We also have the opportunity to enjoy much longer retirements. That means the decisions you make before leaving the workforce can have a meaningful impact on your financial security and quality of life for decades.
If you are approaching the Retirement Red Zone- the five years before and the ten years after you retire- it is an excellent time to review your financial plan.
Here are four common retirement planning mistakes worth addressing before you leave your career job.
1. Waiting Too Long to Save and Invest for Retirement
One of the most valuable advantages in retirement planning is time.
When you begin saving and investing earlier in your career, your contributions have more time to potentially grow through compounding. You also have more opportunities to adjust your savings strategy as your income, expenses, and goals change.
Saving and investing are not the same
Saving means setting aside money for future use. A readily accessible emergency fund can help you handle unexpected expenses without having to sell investments during an unfavorable market.
Investing means putting money into assets such as stocks, bonds, or other investments with the goal of achieving long-term growth or income. Investments fluctuate in value, and returns are not guaranteed.
A practical financial plan generally considers both:
- An emergency reserve for unexpected expenses and near-term needs.
- Long-term investments designed to support goals such as retirement.
It is never too late to review your strategy
If you are already in your 50s or 60s, you may still have years before retirement. That time can be valuable for increasing contributions, reviewing your investment allocation, and evaluating whether your retirement goals are realistic.
For example, the Rule of 72 provides a rough estimate of how long it takes an investment to double at a given annualized return. At a hypothetical 9% annual return, an investment would double in approximately eight years- but actual returns vary, and the calculation is not a forecast.
The most important step is to understand where you stand today and determine what adjustments may help you move toward your goals.
2. Failing to Save Enough of Your Income
Saving consistently is important, but the amount you save also matters.
No single retirement savings percentage works for everyone. The right target depends on your age, income, existing savings, expected retirement lifestyle, pension or Social Security benefits, and your planned retirement age.
A household with a substantial pension may have different savings needs than a household that expects to rely primarily on investment accounts and Social Security.
How much should you save for retirement?
Rather than relying on a universal rule, consider these questions:
- How much are you currently saving through your employer retirement plan or IRA?
- Are you receiving the full employer match, if one is available?
- How much have you accumulated toward retirement?
- What annual income will you need to support your desired lifestyle?
- How many years remain before you plan to retire?
A financial planner can help you evaluate your savings rate in the context of your complete financial picture.
Your savings strategy should evolve
As your income increases or major expenses change, you may have opportunities to increase retirement contributions. Reviewing your savings strategy annually can help you stay focused on your long-term objectives.
For official information about retirement savings plans and individual retirement accounts, visit Investor.gov.
3. Overlooking Healthcare and Retirement Medical Expenses
Healthcare is one of the most important considerations in retirement planning.
Many people assume that Medicare will cover all their healthcare expenses once they turn 65. However, Medicare does not cover every medical cost, and retirees may still have premiums, deductibles, coinsurance, prescription drug expenses, and other out-of-pocket costs.
Medicare costs and coverage require planning
For 2026, the standard Medicare Part B premium is $202.90 per month, and the annual Part B deductible is $283. Higher-income beneficiaries may pay additional income-related charges. These amounts can change from year to year.
Medicare coverage also depends on the options you select. Original Medicare, Medicare Advantage, prescription drug coverage, and Medicare Supplement Insurance can have different costs and coverage features.
You can review current information at the official Medicare website.
What if you retire before age 65?
If you retire before becoming eligible for Medicare and lose employer-sponsored health coverage, you may need to purchase health insurance through the Marketplace or another source.
The HealthCare.gov retirement coverage guidance explains that losing job-based coverage may qualify you for a Special Enrollment Period. Your available coverage and potential financial assistance depend on your circumstances.
Build healthcare into your retirement income plan
A thoughtful retirement plan should consider healthcare premiums, expected out-of-pocket costs, and the possibility that medical expenses may change over time.
It is also wise to consider how your health and lifestyle choices may affect your retirement experience. Healthy habits can support your quality of life, but they don't guarantee lower medical expenses or replace financial preparation.
4. Entering Retirement With Too Much Debt
Debt can be particularly challenging once you stop receiving a regular paycheck.
During your working years, employment income may help you manage mortgage payments, car loans, credit card balances, and other obligations. In retirement, Social Security, pension income, investment withdrawals, or other sources may need to cover those payments.
Why reducing debt can improve retirement flexibility
Lower monthly expenses may give you more flexibility in how you use your retirement income. Reducing high-interest debt can also limit how much money must go toward interest rather than your lifestyle or other financial priorities.
However, paying off every debt before retirement is not automatically the best choice for every household. The decision should consider interest rates, cash reserves, investment opportunities, taxes, and the need to maintain sufficient liquidity.
Questions to consider before retiring
- What debts will remain when you retire?
- Are any balances subject to high interest rates?
- Will your mortgage be paid off, or will you continue making payments?
- How will you cover your monthly expenses without employment income?
- Would paying down debt affect your emergency savings or other financial goals?
A comprehensive financial plan can help you evaluate these trade-offs and determine a strategy that fits your circumstances.
Preparing for a Successful Retirement
Avoiding retirement planning mistakes is about more than accumulating a large account balance. It is about understanding how your resources, expenses, income, health, and personal goals fit together.
As you approach the Retirement Red Zone, consider reviewing:
- Your retirement savings and investment strategy.
- Your expected retirement income and spending needs.
- Your healthcare coverage and projected medical expenses.
- Your debt repayment plan and monthly obligations.
- Your Social Security claiming strategy and other income sources.
The Social Security Administration’s retirement planning resources can help you review your estimated benefits and consider when to apply.
How Dunncreek Advisors Can Help
Preparing for retirement can feel overwhelming, particularly when you are balancing investment decisions, healthcare planning, debt, and lifestyle goals.
At Dunncreek Advisors, I believe a comprehensive financial plan should center on your priorities. As a CFP® professional and financial planner, I work to provide guidance based on my clients’ best interests and help them understand their options as they prepare for retirement.
Whether you are five years from retirement or already navigating your first years without a paycheck, a thoughtful review of your financial plan can help you make more informed decisions.
Take the Next Step Toward Retirement Readiness
If you are approaching retirement and want to understand whether your financial plan is on track, I would be honored to meet with you.
Dunn Creek Advisors works with families in West St. Paul, Minnesota, and with clients across the country through virtual meetings. Let’s discuss your goals, review your options, and identify opportunities to strengthen your retirement plan.
Contact Dunn Creek Advisors to Schedule a Get-Acquainted Conversation
Frequently Asked Questions About Retirement Planning
1. What are the most common retirement planning mistakes?
Common mistakes include saving too little, waiting too long to invest, overlooking healthcare expenses, and carrying unnecessary debt into retirement. Reviewing these areas before leaving the workforce can help you identify potential challenges and make informed adjustments.
2. How much should I save before retiring?
The amount you need to save depends on your expected retirement expenses, income sources, investment portfolio, retirement age, and desired lifestyle. A personalized financial plan can help estimate your retirement income needs and evaluate whether your current savings strategy is appropriate.
3. How can a financial planner help me prepare for retirement?
A financial planner can help you evaluate retirement savings, investment allocation, Social Security timing, healthcare expenses, debt, and income strategies within one comprehensive plan. A fiduciary financial planner can also help you understand the trade-offs involved in important financial decisions and keep your plan aligned with your goals.
Dunn Creek Advisors does not provide legal or tax advice, and this article is not intended to do so. Investment involves risk, including possible loss of principal. Retirement outcomes are not guaranteed and depend on individual circumstances, market conditions, and other factors.