Six Money Mistakes Retirees Often Regret — and Ways to Avoid Them

Financial missteps are common, whether it's overspending on a spontaneous purchase or falling short on vacation savings. But in retirement planning, those mistakes can have far more serious consequences.

Below are six regrets worth steering clear of while building your retirement nest egg.

1. Waiting too long to begin saving

It is never too late to start putting money aside, but an earlier start gives you a major edge. The best move is to begin now, even if retirement still feels far off. People in their 20s and 30s often overlook the need to save because they have many working years ahead, yet those years are some of the most powerful for compounding wealth.

2. Claiming Social Security too early

You can begin collecting Social Security at age 62, but doing so lowers your monthly benefit compared with waiting. Taking payments as soon as possible may help with immediate expenses, but it may not be the best choice for your long-range financial outlook.

Some retirees choose to work a few extra years so they can postpone Social Security.

3. Overlooking health care expenses

Medical costs continue to climb, and retirement can bring higher health care needs than many people expect. In a recent report, Fidelity Investments estimated that a 65-year-old retiring can anticipate spending an average of $172,500 on health care and medical costs over the course of retirement, more than 4% higher than in the prior year.

Putting aside money for medical expenses, including through tax-advantaged accounts such as health savings accounts (HSAs), can help.

4. Not planning withdrawals carefully

Withdrawing money from retirement accounts gives you access to what you have saved over the years, but moving too quickly can leave you with a larger tax bill than expected. A thoughtful withdrawal strategy can help you draw from your nest egg efficiently while keeping taxes under control.

Knowing how required minimum distributions (RMDs) work and planning for taxes are key parts of that approach.

5. Depending on a single source of income

Social Security may be an important part of your finances, but assuming it alone will cover your lifestyle can be a costly error.

Relying on just one income stream in retirement can force difficult choices later and may even require selling investments when market prices are down. Diversifying income sources is the safer path.

6. Neglecting estate planning

Retirees who intend to leave money to heirs should make sure their assets go to the intended people. Creating an estate plan can help remove that uncertainty.