The first year of retirement is exciting—but it’s also a financial turning point. Without a paycheck, every decision impacts how long your nest egg will last. Private wealth advisor Aaron Channing has seen many retirees stumble early on. Here are four common mistakes and how to avoid them.
Keeping the Same Investment Strategy
What worked during your earning years may not work in retirement. Staying too aggressive can expose you to losses you can’t easily recover from without steady income. Instead, rebalance toward a more conservative approach that protects capital while still allowing for growth. A financial advisor can help tailor the right mix for your lifestyle and goals.
Making Big Purchases Too Soon
Many new retirees splurge on a vacation home, luxury car, or dream trip. While rewarding, these purchases can quickly drain savings. Before making large financial commitments, adjust your budget first. Consider whether the purchase could have been made during working years, or explore more affordable alternatives that still bring joy.
Accessing Retirement Accounts and Social Security Too Early
Starting withdrawals or claiming Social Security as soon as possible may feel tempting, but it can be costly. Early withdrawals trigger higher taxes and reduce future income. If you delay Social Security, your benefits increase—up to 8% more per year until age 70. Patience can mean significantly more lifetime income.
Underestimating Healthcare and Long-Term Care Costs
Medicare doesn’t cover everything. Long-term care, in particular, can lead to massive out-of-pocket expenses. Planning—through savings, insurance, or government programs—helps ensure you won’t have to sacrifice quality of care later.
The Bottom Line: The first year of retirement sets the tone for the decades ahead. Avoiding these mistakes can protect your savings, reduce stress, and keep your retirement dreams on track.