Avoid retirement pitfalls: plan for healthcare costs, adjust spending habits, and use tax-efficient withdrawals to secure your finances and enjoy retirement.
Retirement is a time to enjoy life, but even small missteps can lead to big financial headaches. As a financial advisor with decades of experience, I’ve seen three common mistakes that retirees often make. Let’s go over them and explore how you can avoid these pitfalls.
Many retirees are shocked by just how much they’ll spend on healthcare. It’s not just routine check-ups or prescriptions—it’s unexpected costs like hospital stays, specialized treatments, or long-term care that can strain your finances.
Consider this: healthcare spending in the U.S. has skyrocketed, climbing from 5% of GDP in 1962 to 17% in 2022. And according to the Congressional Budget Office, Medicare spending is projected to nearly double in the next 30 years.
What can you do? Look into supplemental Medicare coverage or long-term care insurance. If that’s not the right fit, start building a health savings fund specifically for medical expenses. Planning ahead can make all the difference in staying prepared.
Without a steady paycheck, many retirees struggle to balance enjoying life and staying financially secure. Some overspend on travel or hobbies early on, while others underspend, afraid to dip into their savings.
Here’s my advice: track your expenses during your first few months of retirement. Use that information to create a realistic budget that lets you enjoy your new lifestyle while keeping spending sustainable. Retirement isn’t about denying yourself—it’s about finding the right balance so you can live comfortably now and in the future.
One of the biggest surprises for retirees is the tax impact of withdrawals. Every time you take money from tax-deferred accounts, it’s added to your taxable income. Large withdrawals can even push you into a higher tax bracket, leaving you with a bigger bill than you expected.
To avoid this, consider a tax-efficient withdrawal strategy. Work with your financial advisor to create a plan that pulls from a mix of taxable, tax-deferred, and tax-free accounts. This strategy can help reduce your tax burden while ensuring your funds last longer.
Retirement is full of possibilities, but avoiding these common mistakes can make it even more rewarding. What are you most excited to do in retirement? How are you planning to manage your budget? Let us know by scheduling a complimentary Retirement Tune-Up financial review.
Disclosure:
Great Lakes Retirement, Inc., (DBA W.A. Smith Financial Group (W.A. Smith), (this website) is owned and operated by W.A. Smith. W.A. Smith offers investment advisory services and is registered with the U.S. Securities and Exchange Commission (“SEC”). SEC registration does not constitute an endorsement of the advisory firm by the SEC nor does it indicate that the advisory firm has attained a particular level of skill or ability. All content available on this Website is general in nature, not directed or tailored to any particular person, and is for informational purposes only. Neither the Website nor any of its content is offered as investment advice and should not be deemed as investment advice or a recommendation to purchase or sell any specific security. The information contained herein reflects the opinions and projections of W.A. Smith as of the date hereof, which are subject to change without notice at any time. W.A. Smith does not represent that any opinion or projection will be realized. Neither W.A. Smith nor any of its advisers, officers, directors, or affiliates represents that the information presented on this Website is accurate, current or complete, and such information is subject to change without notice. Any performance information must be considered in conjunction with applicable disclosures. Past performance is not a guarantee of future results. Neither this Website nor its contents should be construed as legal, tax, or other advice. Individuals are urged to consult with their own tax or legal advisers before entering into any advisory contract. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Investment Advisory Services offered through Great Lakes Retirement, Inc., an SEC-Registered Investment Advisor. Registration does not denote any level of skill or qualification. Insurance and tax planning services offered through W.A. Smith Financial, LLC. We do not offer every plan available in your area. Currently we represent [ 18] organizations which offer [54] products in your area. Please contact Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance Program (SHIP) to get information on all of your options.
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