Most people don’t fail at retirement because of big dramatic decisions. They fail because of simple mistakes they don’t realize until it’s too late to fix them easily.
Today we’re talking about five retirement mistakes people make far too often, and the small steps you can take right now to avoid them. These aren’t complex financial strategies—they’re common-sense adjustments that can make a massive difference in your retirement security.
Disclaimer: This article is for educational purposes only and not personal financial advice. Everyone’s situation is different, so consult with a professional before making financial decisions.
Mistake #1: Waiting Too Long to Start Saving
This is the number one regret among retirees. A lot of people wait until their 40s or 50s to start saving because money feels tight in their 20s and 30s. Student loans, starting a family, buying a home—there are always reasons to delay.
But here’s the truth: time matters more than the amount you save. Compound growth needs years to work its magic, not perfection in your contributions.
Someone who starts saving $200 per month at age 25 will likely end up with significantly more at retirement than someone who starts saving $500 per month at age 45, even though the second person is contributing more than double.
The Fix
Start with whatever you can—even $20 or $50 a month. A small habit started early beats a big habit started late, every single time.
The key is establishing the behavior and giving your money time to compound. You can always increase your contributions as your income grows, but you can never buy back lost time.
Action step: If you haven’t started saving for retirement yet, open a retirement account this week and set up an automatic monthly contribution, no matter how small.
Mistake #2: Relying on Social Security Alone
Many people assume Social Security will cover most of their retirement expenses—until they actually retire and learn it only replaces about 30–40% of pre-retirement income for the average person.
If you were earning $60,000 per year before retirement, Social Security might provide only $18,000–$24,000 annually. That’s a significant gap that your personal savings must fill.
Additionally, Social Security’s future is uncertain. While it’s unlikely to disappear entirely, benefits could be reduced in coming decades as the program faces funding challenges.
The Fix
Treat Social Security as a supplement, not the strategy. Build savings that cover the lifestyle you want, not just the minimum you can survive on.
When planning your retirement number, calculate what you need from personal savings assuming Social Security covers only a portion of your expenses—not all of them.
Action step: Create a free account at ssa.gov to see your estimated Social Security benefits, then calculate the gap between that amount and your actual retirement income needs.
Mistake #3: Not Investing Properly (Or At All)
Here’s a surprising one—a lot of people save money but never actually invest it. They leave thousands of dollars sitting in savings accounts earning less than 1% interest while inflation erodes its purchasing power at 2-3% per year.
On the flip side, others invest too conservatively or too aggressively because they never learned how to balance risk appropriately for their age and timeline.
Why This Matters
Cash alone loses value over time because of inflation. What $100 can buy today will cost $120+ in 10 years. If your money isn’t growing faster than inflation, you’re actually getting poorer in real terms.
The Fix
Keep it simple with a diversified mix of index funds or ETFs that track broad market indexes like the S&P 500 or total market funds.
You don’t need to pick winning stocks or time the market perfectly—you just need to stay invested long enough for compounding to work.
General guideline: The younger you are, the more stocks vs. bonds you can hold. As you approach retirement, gradually shift toward more conservative investments.
Action step: Review your retirement accounts. If the money is sitting in cash or extremely conservative options, consider reallocating to age-appropriate investments. If you’re unsure, a target-date retirement fund automatically adjusts risk as you age.
Mistake #4: Not Knowing Their Retirement Number
You can’t hit a target you can’t see. Many people save diligently without knowing how much they’ll actually need—and discover the shortfall far too late to comfortably address it.
Without a clear goal, you have no way to know if you’re on track, behind, or even oversaving (which, while rare, means you could be enjoying your money more now).
The Fix
A simple way to estimate your retirement needs is the 25× rule: Take the yearly income you want in retirement and multiply it by 25.
For example:
- Want $50,000/year in retirement? Target $1.25 million in savings
- Want $70,000/year? Target $1.75 million
- Want $40,000/year? Target $1 million
This rule assumes you’ll withdraw about 4% of your savings annually, which historically has been a sustainable withdrawal rate for 30-year retirements.
It’s not perfect, but it gives you a clear starting point and a concrete goal to work toward.
Action step: Calculate your retirement number using the 25× rule, then subtract expected Social Security benefits to determine what you need to save personally.
Mistake #5: Underestimating Healthcare Costs
Healthcare is one of the biggest financial shocks in retirement, yet it’s the expense most people completely underestimate or ignore in their planning.
People assume Medicare covers everything, but Medicare still has premiums (Part B and Part D), deductibles, co-pays, and significant out-of-pocket costs. And those numbers rise over time.
According to various estimates, a 65-year-old couple retiring today should expect to spend $250,000-$300,000+ on healthcare throughout retirement. That doesn’t include long-term care, which can easily add another $100,000-$200,000 per person.
The Fix
Build healthcare into your retirement plan now—not later. Factor in Medicare premiums, supplemental insurance (Medigap), prescription drug coverage, and potential long-term care needs.
And if you’re younger and eligible, a Health Savings Account (HSA) can be a powerful long-term tool for tax-free medical savings. HSA contributions are tax-deductible, grow tax-free, and can be withdrawn tax-free for qualified medical expenses.
Action step: If you have a high-deductible health plan, open an HSA and contribute regularly. If you’re approaching retirement, research Medicare options and costs so you’re not surprised.
The Big Takeaway: Timing Is Everything
The common theme behind all five mistakes is timing. People don’t plan late because they don’t care—they plan late because life gets busy and time moves fast.
You always think you have more time than you actually do. Before you know it, you’re 50 and realize you should have started seriously saving 20 years ago.
But here’s the good news: small steps today protect you from big regrets tomorrow.
What You Can Do Right Now
Even if you’re behind, you’re not too late. The best time to start was 10 years ago. The second-best time is today.
- Start saving something – Even $25/month is better than $0
- Invest, don’t just save – Put your money to work in the market
- Know your retirement number – Use the 25× rule to set a target
- Don’t count on Social Security alone – Build your own retirement cushion
- Plan for healthcare costs – They’re bigger than you think
Retirement planning doesn’t have to be perfect. It just has to happen. Start where you are, use what you have, and make consistent progress toward a secure future.
Your future self will thank you for every small decision you make today.
Ready to take the next step? Read our guide on how to calculate your retirement number, or learn how compound interest works to understand how your savings can grow over time.
