5 Common Retirement Planning Mistakes (and How to Avoid Them)

Nobody blows up their retirement with one big dramatic decision. It's almost always a handful of small, boring habits that quietly compound — the same way good habits do, just working against you instead of for you. Here are the five I see trip people up most often.

1. Leaving the employer match on the table

This one's first because it's the cheapest to fix and the most expensive to ignore. If your employer matches 401(k) contributions and you're putting in less than the match threshold, you're walking past free money every single paycheck (just check your plan's vesting schedule, since you may need to stay a few years to fully own the match). Fix this before touching anything else on this list.

2. Assuming retirement will be shorter than it actually is

Average life expectancy at 65 is roughly 18 years for men and 21 for women, but that's only the middle of the range. Roughly 1 in 4 men and 1 in 3 women who reach 65 live to 90, so it's easy to end up stretching the same savings over 25 or 30 years if you only planned for the average. Plan for about 30 years, which is longer than feels strictly necessary. Being pleasantly surprised costs you nothing.

3. Getting the risk level backwards

Some people go too conservative decades before retirement, parking money in cash where inflation quietly eats away at it. Others do the opposite right before retiring — staying aggressively invested and getting caught by a downturn at the worst possible moment. Both mistakes usually trace back to reacting to whatever the market did last week, instead of following a plan that actually matches how many years you have left.

4. Underestimating healthcare costs

Healthcare tends to be one of the biggest line items people get wrong in a retirement budget, especially before Medicare eligibility kicks in and especially anywhere near long-term care. If your retirement budget is just your current healthcare spending extended forward with no cushion, you're probably being optimistic — and this is one area I'd rather see people over-budget than under.

5. Never actually checking the numbers

Honestly, this might be the most common one of all five. It's easy to save "whatever feels reasonable" for years without ever comparing that number against what you'll actually need. A small shortfall is easy to close a decade out. The exact same shortfall, discovered the year before you retire, leaves you with a lot fewer options.

One more worth flagging: skipping the Roth conversion window

This one's newer to the list, but it's becoming common enough to mention on its own. If most of your savings sit in a Traditional 401(k) or IRA, the years after you stop working but before Required Minimum Distributions begin (age 73 if you were born in 1951–1959, age 75 if you were born in 1960 or later) are often your lowest-income years of retirement — and often a good window to convert some of that money to Roth at a low tax rate. Keep in mind that a conversion counts as taxable income, so a big one can also raise the taxable share of your Social Security and your Medicare premiums that year. Skip it, and a large Traditional balance can force big RMDs later, pushing up your tax bill, the taxable share of your Social Security, and even your Medicare premiums, all at once.

The fix for #5, at least, is simple

Our retirement and FIRE calculator runs exactly this comparison — a target based on your desired retirement income, checked against your projected savings given your current contributions and timeline, plus the monthly increase needed if there's a gap. Takes about two minutes, and it's a lot cheaper than finding out the hard way.

Sources

• SSA Actuarial Life Table (period life table) — life expectancy at 65 and the share of people reaching 90 and 95
• Federal Register: Required Minimum Distributions (final regulations) — the RMD starting age of 73 or 75 depending on birth year
• IRS Publication 915: Social Security and Equivalent Railroad Retirement Benefits — when Social Security benefits become taxable
• SSA: Medicare premiums and higher-income beneficiaries — the extra Part B and Part D charge (IRMAA) based on income
• IRS: Retirement topics — Vesting — employer match may vest gradually

This article is for educational purposes only and is not financial advice. Consult a licensed financial advisor for guidance specific to your situation.