Reaching the final years of your career is an exciting milestone. It’s the time when decades of work begin to take shape in the form of retirement goals, travel plans, and well-earned relaxation. Yet this period also brings some of the most important financial decisions you will ever make. At Bill Few Associates, we know that near-retirement financial planning requires careful attention to detail, as the choices you make now can significantly impact your comfort and security for years to come.
As you prepare for this next chapter, it’s helpful to understand some of the most common retirement mistakes and how to avoid them. By recognizing these pitfalls early, you can enter retirement with greater clarity, confidence, and peace of mind.
1. Failing to Adjust Your Investment Strategy
Many people continue to invest as though they are decades away from retirement, keeping a large portion of their portfolio in higher-risk assets. While growth remains important, the focus in your final working years should begin to shift toward preservation and income stability. Market downturns can have a lasting impact when you have fewer years to recover.
Review your portfolio to ensure your investments align with your risk tolerance and timeline. This may involve increasing allocations to more stable assets or adjusting your withdrawal strategy to help protect your savings. A financial advisor can help you find the right balance between growth and security.
2. Overlooking Healthcare Costs
Healthcare often becomes one of the largest expenses in retirement, yet it’s easy to underestimate how much it will cost. Medicare does not cover everything, and supplemental insurance or long-term care coverage may be necessary. Failing to plan for these expenses can place significant strain on your retirement budget.
Some options to start saving for future health care costs include contributing to a Health Savings Account (HSA), Roth IRA, or Roth 401(k) for tax-free growth. When creating a budget for future healthcare costs, make sure to include estimates for deductibles and copays, as well as Medicare premiums.
As part of your near-retirement financial planning, take time to research your Medicare options, evaluate your current health coverage, and consider how you will handle potential long-term care needs. Factoring these costs into your plan now can help you avoid financial surprises later.
RELATED: Read these smart financial strategies for long-term health care planning.
3. Claiming Social Security Too Early
Deciding when to claim Social Security benefits is one of the most important financial decisions you will make. Many people begin collecting as soon as they are eligible at age 62, but doing so can permanently reduce their monthly benefit. Waiting until full retirement age, or even beyond, can increase your income and provide valuable protection against outliving your savings.
Before making your decision, evaluate your overall financial situation, expected life span, and income needs. A well-timed Social Security strategy can make a meaningful difference in your long-term financial outlook.
4. Ignoring Tax Implications
As you transition from saving to spending, taxes can become more complex. Withdrawals from retirement accounts, required minimum distributions, selling your home or a property, and IRAs or other retirement accounts can all affect your tax liability. Without proper planning, you may end up paying more in taxes than necessary.
Consider working with a financial advisor or tax professional to create a strategy that coordinates your income sources in a tax-efficient way. This might include timing withdrawals from tax-deferred accounts, managing capital gains, or converting certain funds to Roth accounts before retirement.
5. Entering Retirement Without a Clear Plan
Retirement is about more than money; it’s a major lifestyle change. Failing to plan how you will spend your time, where you will live, or how your spending will shift can create unnecessary stress. A preparing-to-retire checklist can help you stay organized and focused as you approach your retirement date. Your checklist should include reviewing your budget, confirming income sources, paying down debt, updating estate documents, and assessing healthcare needs. It’s also wise to think about your personal goals for retirement, such as travel, volunteering, or part-time work.
Planning Considerations for Solo Agers
If you are approaching retirement without a spouse, partner, or close family support, your planning needs may look a little different. Solo agers often need to think more intentionally about healthcare decisions, long-term care, and who will help manage their affairs if they are unable to do so. Establishing trusted professionals and legal documents such as powers of attorney and healthcare directives can help ensure your wishes are carried out.
It’s also valuable to build a strong social network and explore community resources that can provide connection, support, and companionship as you age. Including these considerations in your near-retirement financial planning can make a significant difference in maintaining independence and peace of mind.
Start Planning with Confidence
Your final working years are an opportunity to refine your plans and ensure everything is aligned for a smooth transition into retirement. Near-retirement financial planning helps you identify potential challenges before they become setbacks and allows you to take advantage of strategies designed to protect your long-term financial health.
At Bill Few Associates, we help individuals and families prepare for retirement with clarity and confidence. Our advisors take the time to understand your unique goals and create a personalized plan that helps you avoid common retirement mistakes while maximizing your financial opportunities.
If you’re approaching retirement and want to make sure you are on the right track, contact Bill Few Associates today. Our team will work with you to create a clear, personalized plan so your next chapter can be everything you have worked for.
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