TL;DR

Most people aren't ready for how long and expensive retirement can be. Here are the 10 biggest mistakes we see: underestimating costs, retiring too early, relying too much on Social Security, ignoring inflation, going too conservative too soon, having no withdrawal plan, missing healthcare costs, ignoring taxes, failing to stress-test, and procrastinating estate planning. A solid retirement plan protects against all 10.

Estimated reading time: 7 minutes

Retirement Isn't the Finish Line. It's the Starting Line.

Imagine spending decades saving and building your wealth, only to realize too late that your plan can't actually carry you through retirement. It's more common than you think.

At Compound Advisory, we see the same critical mistakes made over and over again. The good news? They're avoidable if you know what to watch for.

That's why we developed the Compound Cultivator™ Framework — a smarter way to grow, protect, and harvest your wealth through every stage of retirement.

Here are the top 10 mistakes people make with retirement planning (and how to avoid them):

1. Underestimating How Much You'll Need

People often assume they'll spend less in retirement. Sometimes that's true. But many times, costs go up -- travel, healthcare, helping adult children, or simply maintaining your lifestyle.

Example: A 65-year-old retiring today could need $1M–$2M+ to maintain a $75,000 annual lifestyle for 30+ years, even adjusting for inflation.

Avoid it: Plan for full lifestyle replacement, not a "bare minimum." Build in room for fun, family, and flexibility.

2. Retiring Too Early Without a Clear Plan

Just because you hit 62 or 65 doesn't mean you should retire. Early retirement without a sustainable income plan can lead to running out of money — or being forced back into the workforce.

Avoid it: Work backward. Start with "What do I want retirement to look like?" Then figure out if your portfolio, income streams, and cash flow actually support it.

3. Relying Too Much on Social Security

Social Security was never designed to be your sole income source. At best, it might cover 30% to 40% of your pre-retirement income. And future benefits could be reduced if funding issues persist.

Avoid it: Treat Social Security like a bonus, not a foundation. Your retirement plan should work even if benefits are lower than expected.

4. Ignoring Inflation

Inflation quietly chips away at your purchasing power. Even "low" 2–3% inflation means you’ll need nearly double the income in 25–30 years.

Avoid it: Use real return estimates (returns after inflation) when planning. Keep part of your portfolio growing through retirement.

5. Investing Too Conservatively Too Soon

Many retirees panic and go "all bonds and cash" at retirement. But a 65-year-old could easily live 30+ years — and need growth to outpace inflation and withdrawals.

Avoid it: Balance growth and preservation. A well-structured "retirement allocation" still includes stocks, especially for long-term buckets.

6. Not Having a Withdrawal Strategy

Which accounts should you draw from first? Taxable? Roth? 401(k)? Many retirees just "take money when they need it" without thinking about taxes, market timing, or sequence risk.

Avoid it: Use a coordinated withdrawal strategy. Done right, it can extend your portfolio life by years and save six figures in taxes.

Hint: This is where our Compound Cultivator™ Framework shines — helping you harvest assets in the smartest, most tax-efficient way.

7. Underestimating Healthcare Costs

Medicare isn't free. Out-of-pocket costs for premiums, deductibles, co-pays, prescriptions, and long-term care can easily top $300,000–400,000+ over a couple's retirement.

Avoid it: Budget realistically for healthcare. Explore HSAs before retirement, and consider supplemental insurance.

8. Failing to Account for Taxes

Your 401(k) and IRA withdrawals are usually taxed as ordinary income. If you don’t plan, required minimum distributions (RMDs) at 73 can balloon your taxes.

Avoid it: Use proactive tax planning strategies — Roth conversions, strategic withdrawals, and smart RMD management.

9. Not Stress-Testing Your Plan

Most people run a "perfect world" retirement plan: steady 7% returns, no surprises. But real life brings recessions, inflation spikes, healthcare shocks, and family emergencies.

Avoid it: Stress-test for bad scenarios. What if the market drops 30% the first three years? What if you live to 100? Planning for worst-case scenarios makes you more confident.

The Compound Cultivator™ process is built to weather different market climates without forcing you to sell at a loss.

10. Procrastinating Estate Planning

Wills, trusts, power of attorney, healthcare directives — they’re easy to put off. But they’re critical for protecting your family, your wishes, and your assets.

Avoid it: Update your estate plan before retirement. Review beneficiaries, build in contingencies, and simplify for your heirs.

Final Thought: You Only Get to Retire Once

Most mistakes aren't obvious until it's too late. The earlier you catch them, the more options you have.

At Compound Advisory, we help clients build retirement plans that aren't just "good enough" — they're resilient.

Our proprietary Compound Cultivator™ Framework combines smart allocation, dynamic withdrawals, and stress-tested contingency planning so you can retire with confidence.

Want to see if your plan is ready?

Schedule a retirement readiness call here!

Let's make sure your retirement isn't left to chance.

Keep Compounding.

P.S. Curious how your current portfolio stacks up? Ask about our Compound Cultivator™ Retirement Planning Framework.