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8 retirement mistakes to avoid

Tips to help keep your retirement on target.

Key takeaways

  • Consider including factors like where you'll live and healthcare expenses when creating your retirement plan.
  • Many retirees claim their Social Security benefits once they're eligible, but waiting until the full retirement age or later can increase monthly benefits.
  • Be a conservative giver and be mindful of fraudsters.

As you’re planning for retirement, it’s natural to think about how to do things the right way—whether it’s savings, budgeting, or staying active. But you might not be thinking about common retirement mistakes you should try to avoid. 

Continue reading to learn more about 8 things to watch out for as you’re nearing or beginning to live in retirement.

1. Consider your future needs and other costs before a move

Take into account how well a location will work for you as you continue to age. Mobility around the house—as well as around town—is going to become more important each year. If you're considering a move, you may want to think about finding a walkable community or a home with good access to public transportation to help ensure you can get around easily and safely, and your maintain independence as long as possible. You may also want to consider how close you want to be to your friends, family, and communities. 
 
If you choose to move, because taxes can vary, be mindful of whether you'll pay more or less in state, property, and other taxes. Other expenses like cost of living, housing, and gas and transportation could also either increase or decrease too. It's even crucial to think about how quickly smaller expenses can add up and impact your budget. 

2. Avoid claiming Social Security too early or forgetting about taxes on your benefits

Some retirees choose to begin collecting their Social Security benefits once they reach the minimum age of 62, but oftentimes without grasping long-term ramifications like permanently reduced monthly benefits (by up to 30%1), in comparison to waiting until the full retirement age. Some people may still choose to begin collecting at 62 because they need income sooner, may have health issues, or other factors. If you’re able to wait to claim Social Security until your full retirement age, you’ll get 100% of your monthly benefit.
 
If you can afford to delay collecting Social Security until age 70, that may be even better. Your monthly benefit will increase 8% per year between your full retirement age and age 70, securing the highest possible monthly benefit (to some degree).
 
Depending on your income sources during retirement, you may have to pay taxes on your Social Security benefits. If your Social Security benefits are your only source of retirement income, then in most cases your benefits will not be taxed. Conversely, if you have substantial retirement income in addition to your Social Security benefits, like a pension or income from investments, you’ll likely need to pay taxes on your benefits. Additionally, depending on what US state you live in, you may have to pay state tax on your Social Security benefits, in addition to federal tax. As of 2026, 8 US states tax Social Security benefits.2

3. Don’t ignore inflation

Investing may sometimes seem risky, but not investing can be risky as well. Investing in a way that at least keeps up with inflation can help ensure that you’re able to keep up with increasing prices. 

Your retirement plan likely included saving a certain amount and nobody wants inflation to diminish the purchasing power of savings over time.

4. Don’t forget to plan for longevity

No one knows how long they might live. It can be a good idea to make sure you're planning for a retirement that lasts longer than expected. Products like deferred income annuities could help  ensure that you have a source of guaranteed income.3 These products might not be appropriate for everyone. Consider speaking with a financial professional to evaluate your potential guaranteed income needs and see if they make sense for you.

5. Avoid retiring too soon

Don't forget that retiring too soon can cost you. For example, Medicare coverage doesn't begin until age 65 and healthcare coverage before then (with an option like private health insurance) can be pricey. Also, unless you are over the age of 59½, there's a 10% early withdrawal penalty for retirement accounts like traditional IRAs and 401(k) plans. Even Roth IRAs and workplace retirement plan Roth balances may face penalties and potentially taxes if withdrawals are not qualified.4,5 This is just to name a few costs and doesn't even include basic living expenses or the money you forfeit by retiring early.

Even if you can afford it, it's practical to check your emotional readiness for retirement, as well as your savings and finances. Many people choose to ease into retirement by cutting back to part-time work or volunteering before retiring altogether. That's something to consider too, but of course, weigh the pros and cons. 

6. Don’t forget to plan for health care expenses

Getting sick or injured can seriously derail retirement plans. Don't dismiss the possible need for medical expenses and the potential need for long-term care. Even relatively minor issues and dental emergencies can be financial setbacks. Saving in a health savings account (HSA), if you have access to one, can help cover the cost of some of these expenses in retirement. If you’ve already signed up for Medicare, you could consider saving in an IRA if you have earned income. 
 
Saving in savings account or other taxable accounts are options too. However you do it, saving for unexpected expenses is always a good idea—even in retirement. 

7. Avoid being too generous with family

It’s natural to want to help family, but it's important to keep a realistic view of your finances and put limits on the help you can give others during your retirement. It’s very likely your budget will have less flexibility in retirement than when you were working, so be sure to plan for sensible gift-giving that won’t set you back in the long-term.

8. Avoid falling for scams

Fraudsters often target older adults because they’re generally less savvy with social media privacy settings, more likely to answer calls from unknown callers, open junk mail rather than discard it, and have accumulated significant savings.6 
 
Being cognizant of the different types of scams, as well as being cautious can help in protecting yourself. A few good tips are to take advantage of multi-factor authentication and always verify phone numbers and websites. You can also create safeguards for yourself by registering your cell phone number with the National Do Not Call Registry, as well as become more aware of how to detect and avoid fraud from AI technology. When in doubt hang-up or log out, limit the personal information you share online and over the phone, and ensure you have strong security controls.  
 
Another good tip is to add a trusted contact to your investment accounts so that if fraud is suspected, your advisor will have someone they can contact. 

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More to explore

1. "Starting Your Retirement Benefits Early", SSA. September 2024, https://www.ssa.gov/benefits/retirement/planner/agereduction.html. 2. T. Holmes and A. Markowitz, "Which States Tax Social Security Benefits?," April 2026, https://www.aarp.org/social-security/faq/which-states-do-not-tax-benefits/. 3. Annuity guarantees are subject to the claims-paying ability of the issuing insurance company. 4. For a distribution to be considered qualified, the 5-year aging requirement has to be satisfied, and you must be age 59½ or older or meet one of several exemptions (disability, qualified first-time home purchase, or death among them). 5. A distribution from a Roth 401(k), Roth 403 (b) and Roth 457 (b) is federally tax free and penalty free, provided the five-year aging requirement has been satisfied and one of the following conditions is met: age 59½, disability, or death. 6. "Protecting Seniors from Financial Exploitation," FINRA, July 2025, https://www.finra.org/investors/insights/senior-financial-exploitation.

Investing involves risk, including risk of loss.

Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

This information is general in nature and provided for educational purposes only.

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