Retirement is a time to live your best life — to take that vacation, indulge in small luxuries and spend your hard-earned money on the things that matter most. For all of this, you have to make sound financial decisions.
The problem? Many retirees aren’t always great at that.
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GOBankingRates spoke with Andrew Lokenauth, money expert and owner of Fluent in Finance, to discuss the worst mistakes he saw retirees make in 2024.
Aggressive Investment Decisions Led to Costly Errors
According to Lokenauth, many retirees got caught up in the AI investing hype and put too much money into tech stocks.
“They didn’t diversify their portfolios enough, which left them vulnerable when the market got shaky,” he said. “Some folks — bless their hearts — bet their entire retirement on just one or two hot stocks … and that’s never a good idea.”
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Claiming Social Security Too Early Caused Long-term Problems
“I saw lots of people grab their Social Security at 62 just ’cause they could,” said Lokenauth.
He said this meant they got about 30% less in monthly payments than if they’d waited until full retirement age. “And boy, did they regret it when inflation started eating away at their reduced checks.”
Drawing Down Retirement Accounts Too Quickly
“Some retirees treated their 401(k) [plans] like a piggy bank — yikes!,” Lokenauth said.
He explained that they didn’t follow the 4% withdrawal rule. “Some were taking out 8%-10% annually.”
He said this dangerous pattern means they might run out of money way too soon.
Ignoring Healthcare Planning and Costs
“I can’t tell you how many folks didn’t plan for medical expenses,” said Lokenauth. “They thought Medicare would cover everything — it doesn’t.”
He also noted that some skipped getting supplemental insurance and then got hit with huge bills.
Keeping Too Much House
Another mistake, according to Lokenauth, is that lots of retirees stayed in homes that were way too big — and expensive — for their needs.
“They’re spending a fortune on maintenance, property taxes and utilities,” he explained. “Some couldn’t bring themselves to downsize … even though it would’ve saved them thousands.”
Not Adjusting to Inflation Reality
Many retirees didn’t update their budgets to match rising prices, said Lokenauth.
“They kept spending like it was 2020 … but everything costs more now,” he said. “Some didn’t realize their fixed income needed adjusting for inflation.”
Poor Tax Planning Decisions
“I saw folks get hit with surprise tax bills ’cause they didn’t plan their withdrawals,” Lokenauth said.
He added that some didn’t understand how required minimum distributions work. “And others … well, they forgot about taxes on their Social Security benefits.”
Rushing Into Retirement Without a Plan
“Some people retired just ’cause their friends did — not a great reason!” said Lokenauth. “They didn’t have a clear spending plan or budget in place. Many hadn’t thought about how they’d actually spend their time — and money.”
Taking Bad Advice From Non-Professionals
According to Lokenauth, too many retirees took financial advice from social media or their neighbors.
“Some fell for investment scams targeting seniors,” he said, while others made moves based on what worked for their friends. “But everyone’s situation is different.”
Underestimating Life Expectancy
“Lots of folks planned for maybe 15-20 years of retirement,” Lokenauth explained. “But people are living longer than ever. … Some need their money to last 30 plus years.”
He said this miscalculation meant some didn’t save enough or invested too conservatively.
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This article originally appeared on GOBankingRates.com: I’m a Finance Expert: 10 Worst Mistakes I Saw Retirees Make in 2024
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