Five Retirement Errors That Can Drain Six-Figure Portfolios — and the Free Service I Recommend Now

A veteran financial journalist and CPA explains the five most expensive retirement planning mistakes he has seen over a 45-year career, and why avoiding them may be simpler than expected.

MoneyTalksNews receives a referral fee when readers use the free SmartAsset matching service described below, at no cost to you. Our editorial recommendations are based on merit, not compensation.

I’ve worked for 45 years as a CPA, a Wall Street investment advisor, and a two-time Emmy-winning financial journalist covering personal finance. During that time, I’ve seen thousands of capable, successful investors reach retirement after making one or more avoidable mistakes — each one quietly costing them six figures over the following 20 to 30 years.

If you have $250,000 or more saved and are within 10 years of retirement, this is for you. Below are the five mistakes I see most often, why each one costs more than people expect, and how a free service called SmartAsset is designed to help you avoid them by matching you with up to three vetted, fiduciary financial advisors in your area.

Already know you want to speak with a fiduciary advisor near you? Take SmartAsset's free questionnaire here →

Why I’m Comfortable Recommending SmartAsset

I’m approached by many financial services, but most never make my list. SmartAsset does, for four reasons:

It costs you nothing. There is no fee, no obligation and no upsell. SmartAsset is compensated by the advisors in its network, not by readers.

The advisors are fiduciaries. Every advisor in SmartAsset’s network is legally required to put your interests ahead of their own. That is not just marketing language — it is a regulatory standard. Most stockbrokers and insurance salespeople do not meet it. The advisors SmartAsset matches you with do.

More than 2 million people have used it. SmartAsset is not new or unproven. It has operated at scale for years.

The first consultation is free. Nearly every advisor SmartAsset matches you with offers an initial appointment at no charge. You can ask questions, compare options and move on if the fit is not right — without spending anything.

One important note: the matching questionnaire takes about 10 minutes. SmartAsset asks roughly 37 questions about your age, retirement timeline, assets, income, risk tolerance and family situation. The more information you provide, the better the match.

Near the end, you will be asked for a phone number. If you enter a fake number or leave it blank, you will waste your time. Advisors use it to arrange your free initial conversation. But you still control whether and when you respond.

Here are the five mistakes.

Mistake #1: Treating Retirement Like a Finish Line Instead of a 30-Year Project

Many people approach retirement the way they approached their wedding day: all attention goes to the date, and then the real work begins. The date matters far less than the next 30 years.

A real retirement plan answers questions such as:

• How much can I spend each year without running out of money?
• What order should I draw from my accounts to reduce taxes — IRA, 401(k), Roth, taxable, Social Security?
• What if the market falls 30% in the second year of retirement?
• What happens to my surviving spouse’s income if I die first?

Northwestern Mutual’s Planning & Progress Study has repeatedly found that about 71% of U.S. adults say their financial planning needs improvement, yet only about 29% work with a financial advisor. The gap between recognizing the need for a plan and actually having one is where six-figure mistakes happen.

SmartAsset’s matching service connects you with advisors who focus on pre-retirees and retirees in your asset range — the people for whom these questions are anything but theoretical.

Get matched with up to three fiduciary advisors near you →

Free service. About 10 minutes to complete. No obligation. More than 2 million people have used it.

Mistake #2: Waiting for “the Right Time” to Get Expert Help

Among the retirement regrets I hear from readers, the most common version is: “I wish I had spoken with someone 10 years earlier.”

Bankrate’s annual Financial Regrets Survey has consistently found that not saving enough for retirement is Americans’ No. 1 financial regret. But the bigger issue is often not the savings rate — it is strategy. People with $400,000 saved at 55 often believe they are too small to need an advisor. In reality, that is exactly backward. The decisions made in the five years before retirement — and the first five years after — can determine whether the money lasts 20 years or 35.

Vanguard’s well-known “Advisor’s Alpha” research estimates that a strong advisor can add about 3% annually in net returns through tax-aware investing, behavioral coaching and disciplined withdrawal strategies. On a $500,000 portfolio over 20 years, that can compound into hundreds of thousands of dollars. There is no guarantee, but the cost of waiting is real and measurable.

Mistake #3: Retiring at the Wrong Time — Too Early or Too Late

This is the error that often goes unnoticed.

Retire too early, and a 30-year retirement may put too much strain on a portfolio designed for 20. The Employee Benefit Research Institute’s Retirement Confidence Survey has consistently shown that nearly half of retirees end up retiring sooner than planned, often because of a health issue or a layoff rather than by choice. If you have not stress-tested your plan for an early-retirement scenario, one event could force a decision you were not prepared to make.

Retire too late, and you give up valuable healthy retirement years in exchange for modest extra savings that may not materially improve the outcome. Many readers I hear from kept working “just to be safe” and later realized they could have stopped two or three years earlier without any meaningful financial difference.

The right retirement date is not a guess. It is the result of a model: your expenses, your income sources, your tax situation, your Social Security claiming strategy and your portfolio’s projected lifespan under different market conditions. That is what a good advisor builds for you.

Mistake #4: Hiring the Wrong Advisor — Or Trusting Someone Who Is Not Really Working for You

This is the mistake that can cost the most, which is why I recommend SmartAsset rather than simply saying to “find a financial advisor.”

The financial services industry is full of people who use the title “advisor.” Most are not legally required to act in your best interest. Some are commission-based salespeople paid to sell specific products. Some are licensed only to sell insurance. Some are dually registered and can switch between giving “advice” and making a “sale” in the same conversation.

A fiduciary is legally required to put your interests first. That one distinction can be worth tens of thousands of dollars over a typical retirement — and it is almost impossible to spot from the outside. Two advisors can have identical offices, identical websites and nearly identical pitches. One owes you a fiduciary duty. The other does not.

Every advisor in SmartAsset’s network is a fiduciary. That is the screen. SmartAsset has done the vetting most readers never get to do: credentials, regulatory history and disciplinary records. You do not have to.

Get matched with up to three vetted, fiduciary advisors in your area →

Free service. About 10 minutes. No obligation. More than 2 million people matched.

Mistake #5: Mismanaging Risk — Taking Too Much, or Not Enough

The standard advice — “become more conservative as you age” — is only half right and can be quietly dangerous.

Yes, a 65-year-old should not have the same stock exposure as a 35-year-old. But a 65-year-old who becomes too conservative faces another risk: inflation. At 3% annual inflation, $500,000 buys roughly $276,000 worth of goods in 20 years. A retiree who moves entirely into bonds and CDs has not eliminated risk — they have swapped market risk for purchasing-power risk, and the second one is harder to recover from.

The right portfolio for someone within 10 years of retirement balances three things: protection against sequence-of-returns risk, enough growth to stay ahead of inflation over 30 years and a withdrawal strategy that does not force sales at the wrong time.

That is exactly the kind of analysis a fiduciary advisor can build for clients in your asset range. It is also the kind of work you cannot reliably get from a do-it-yourself spreadsheet or a brokerage’s generic risk-tolerance quiz.

The Bottom Line

All five mistakes above share one thing: they are relatively easy to avoid with the right help, but expensive to fix after the fact. A retiree who claims Social Security at the wrong age, draws from accounts in the wrong order or uses the wrong asset mix in the first decade of retirement can lock in losses of $150,000 or more — and never realize it happened.

The investors I have seen navigate retirement most successfully have one thing in common: they did not try to do it alone. They built a relationship with a fiduciary advisor who understood their full picture and was legally bound to act in their interest.

If you have $250,000 or more saved, that level of help is available at no cost. SmartAsset's free matching service can connect you with up to three vetted, fiduciary financial advisors in your area in about 10 minutes. More than 2 million people have used it. There is no obligation, and nearly every advisor offers a free first consultation.

Free | About 10 minutes | No obligation | Fiduciary advisors only | More than 2 million people matched

ADVERTISEMENT. MoneyTalksNews is an independent personal finance publisher. We receive a referral fee when readers use the SmartAsset matching service described above, at no cost to you. Our editorial recommendations are based on merit, not compensation.