Retirement income planning mistakes

When transitioning into retirement, consider your upcoming needs—including budget and lifestyle requirements—to help increase your chances of enjoying your retirement years to the fullest.

Financial mistakes to avoid in retirement

Here are some of the most common retirement planning mistakes to avoid to ensure that your path to retirement is as smooth as it is secure:

1. Starting to save too late

The power of compound interest means the earlier you start saving, the better. Delaying can impact the amount you accumulate and make it harder to achieve and/or maintain your desired lifestyle in retirement.

2. Underestimating medical expenses

Healthcare costs can be one of the biggest expenses during retirement. Failing to plan for these costs can be a drain on your retirement savings.

3. Overlooking long-term care needs

Long-term care, often not covered by traditional health insurance, can be costly. Planning for these expenses can be crucial in helping to protect your retirement savings.

4. Neglecting tax implications

Understanding how retirement income is taxed is essential. Efficient tax planning can help you keep more of your hard-earned savings. If you don’t know where to start or have questions about managing taxes in retirement, working with a New York Life agent can help.¹

5. Ignoring inflation

Inflation can erode purchasing power over time. Your retirement plan should account for this to ensure that your savings maintain their value.

6. Failing to diversify investments

Diversification helps reduce risk. While diversification does not guarantee a profit or protect against market loss, relying too heavily on one type of investment can expose you to unnecessary financial challenges.

7. Withdrawing too early or too much

Early withdrawals can incur penalties and reduce compound growth. Similarly, withdrawing too much too quickly can jeopardize your financial stability in later years.

8. Overlooking estate planning

Estate planning is a critical component of retirement planning. It ensures that your assets are distributed according to your wishes and can help reduce the tax burden on your heirs.

9. Being unrealistic about retirement expenses

Underestimating your retirement lifestyle expenses can lead to financial strain. It’s important to have a realistic understanding of your future needs.

10. Neglecting to review and adjust your plan

Your financial situation and goals may change. Regularly reviewing and adjusting your retirement plan ensures that it stays aligned with your expectations. 

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¹New York Life does not provide legal, accounting, or tax advice. You should obtain advice specific to your circumstances from your own legal, accounting, and tax advisors.