Even Responsible Savers Make Retirement Mistakes
You've already done the hard work to stash away a nice nest egg for retirement. Don't blow it now. Here are four common missteps that people entering retirement should avoid.

There actually are people out there diligently saving for retirement.
Yes, you read that correctly. It may not seem like it, given the media’s constant focus on Baby Boomers’ shaky financial future. But there are pre-retirees who have been putting away money for decades in preparation for a long and happy retirement.
If you’re in that group, good for you.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But even people who have been responsible with their money can run into challenges when they enter retirement. It requires a monumental shift in your mindset, and it’s easy to make mistakes.
Here are four missteps that even skillful savers need to learn to avoid:
1. Don’t become too enamored with cash.
I often find that people who are naturally gifted at saving money have far too much sitting in cash. And I understand that. Many fear investing in the market because of previous tumbles. In the last 16 years, we’ve had two major drops, and that puts people on edge.
It’s important to always have some emergency money available, but holding too much cash in your portfolio or in the bank opens you up to inflation risk. As the years pass, you’ll lose purchasing power. And then there’s the issue of taxes. If you keep your money in a taxable savings, money market, brokerage or other cash account, you’ll have an ever-growing tax liability. If safety is a priority, talk to your adviser about alternatives that protect your principal and offer a reasonable rate of return.
2. Don’t take too much risk.
If you’ve been enjoying this long-running bull market, like so many have, it’s likely your risk meter is broken. And again, that makes sense. If you lost money in your 401(k) or IRA back in 2000 or 2008, I’m sure you didn’t like it much, but if you were still working and earning a paycheck, it probably didn’t affect your day-to-day lifestyle. Your expenses were met and you were still contributing to your retirement accounts. But in retirement, you won’t have that paycheck anymore. And because your nest egg must generate income, market volatility can have a much greater impact.
Completely avoiding the markets is not a solution for most retirees — especially if you’re going to keep pace with inflation and retain the opportunity for growth and future income. But saving for retirement and planning for retirement are two different things. It’s important to take a balanced approach between income and growth to help prepare for good and bad economic times.
3. Don’t forget about the tax “time bomb.”
Tax planning should be a part of your decision-making as soon as you begin retirement planning. Believe it or not, taxes don’t end when you retire. Many people think they do — or, at least, they think taxes will be greatly reduced. That’s a myth — especially now, as so many retirees have most of their savings in tax-deferred accounts.
When you withdraw money from those accounts in retirement, you’ll be taxed on your contributions and the account growth. It may not seem like it, but today’s taxes are low compared to what past generations experienced. Do you think you’ll be alive when taxes are higher than they are now? Remember, the federal debt now stands at $20 trillion, and projections suggest that amount will continue to rise. Somebody is going to have to pay that bill.
Unfortunately, tax-deferred accounts are vulnerable to tax hikes. It’s probably a good idea to take advantage of those low rates while you can by working with a certified tax planner to help find ways to get your tax rate closer to zero. Some possibilities to explore include converting part of your traditional IRA each year to a Roth IRA. You’ll owe taxes on the amount converted, but it may be at a lower rate since you’re retired, and the Roth has no required minimum distributions.
4. Don’t neglect to live a little.
Some retirees have trouble remembering what they worked so hard to save for. They had an idea of the life they wanted in retirement, but they worry so much about running out of money, they let that dream go. A comprehensive retirement plan can help you transition from a saving mindset and help give you the confidence to spend on the things you always hoped and dreamed for, and for which you worked so hard to save.
Whether your retirement assets are modest or massive, there are common challenges for all retirees. From day one, you’ll need reliable income streams so you can pay your basic bills. That money will form the foundation for the rest of your retirement — and once that foundation is in place, you can build your lifestyle around it. Lifestyle income is the money you spend for fun, family, travel, adventure, etc. It’s going to fluctuate as the markets traverse their inevitable ups and downs, but it should be part of your plan.
Retirement shouldn’t be a time of worry and stress. It should be a time to relax and enjoy life after years of working. But just saving up a big stash of money isn’t enough to guarantee success. A plan that addresses current and future needs will help keep you on track and help you reach your retirement goals.
Kim Franke-Folstad contributed to this article.
Investment advisory services offered through Brookstone Capital Management, LLC (BCM), a registered investment advisor. BCM and Carolina Retirement Resources are independent of each other.
Investing involves risk, including the potential loss of principal. Any references to protection benefits or safety generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Dr. Richard Pucciarelli is the president and founder of Carolina Retirement Resources Inc. He has over 15 years experience serving retirees and pre-retirees in planning for and protecting their financial futures. Pucciarelli is an Investment Adviser Representative and a licensed insurance professional. He hosts the "Financial Symphony" show on WBT Radio 1110 AM every Saturday morning at 11 a.m.
-
Microsoft Stock: Innovation Spurs Its 100,000% Return
Microsoft's ability to recognize the "next big thing" has allowed sales – and its share price – to grow exponentially over the years.
By Louis Navellier Published
-
6 Great Vacation Ideas for Wheelchair Users
These six places provide plenty of travel inspiration for people who use wheelchairs.
By Becca van Sambeck Published
-
Three Essential Estate Planning Steps to Protect Your Nest Egg
After dedicating years to building your wealth and securing your future, make sure your assets are protected and your loved ones are provided for in the future.
By Nicole Farbo, CFP® Published
-
Is Chasing the American Dream Ruining Your Financial Life?
Too many people focus on visible affluence as a marker of success. Here's how to avoid succumbing to the pressure and driving yourself into debt.
By Anthony Martin Published
-
Retiring With a Pension? Four Things to Know
The road to a secure retirement is slightly more intricate for people with pensions. Here are four key issues to consider to make the most out of yours.
By Joe F. Schmitz Jr., CFP®, ChFC® Published
-
How to Teach Your Kids About the Tax Facts of Life
Taxes are unavoidable, so it's important to teach children what to expect. Also, does your child need to file a tax return for 2024? Find out here.
By Neale Godfrey, Financial Literacy Expert Published
-
Revocable Living Trusts: The Good, the Bad and the Ugly
People are conditioned to believe they should avoid probate at all costs, but when compared with living trusts, probate could be a smart choice for some folks.
By Charles A. Borek, JD, MBA, CPA Published
-
How to Plan for Retirement When Your Child Has Special Needs
When your child has special needs, your retirement plan should include a plan for when you'll no longer be able to care for them yourself. A five-step guide.
By Christopher M. Butterworth, ChSNC®, CRPS, CLU® Published
-
Tax Advantages of Oil and Gas Investments: What You Need to Know
Tax incentives allow for deductions and potential tax-free earnings — benefits accessible only to accredited investors in small producer projects.
By Daniel Goodwin Published
-
Charitable Contributions: Five Frequently Asked Questions
Make the most of your good intentions by understanding the ins and outs of charitable giving. A good starting point is knowing what's deductible and what isn't.
By Stephen B. Dunbar III, JD, CLU Published