Protecting Your Retirement Savings From Common Mistakes

After years of saving, protecting what you have becomes just as important as growing it. Some common mistakes can quietly reduce retirement savings over time. Being aware of them can help you avoid costly setbacks.

1. Withdrawing too much too soon

Large withdrawals early in retirement can make it harder for savings to last. Creating a withdrawal plan based on your budget and expected lifespan can help. Many people review their withdrawal rate annually, especially after years when investments perform poorly.

2. Overlooking taxes

Withdrawals from traditional IRAs and 401(k)s are generally taxable. Large withdrawals can:

• Push you into a higher tax bracket
• Make more of your Social Security benefits taxable
• Increase Medicare premiums through IRMAA
• Reduce the new senior deduction for tax years 2025 through 2028

Planning the timing and source of withdrawals can help manage taxes.

3. Missing required minimum distributions

If you have traditional retirement accounts, failing to take required minimum distributions on time can result in a penalty. Set reminders or arrange automatic withdrawals.

4. Not understanding fees

Investment fees, advisory fees and product fees reduce your returns over time. Ask:

• What fees do I pay, and how much in dollars per year?
• How is my financial professional paid?
• Are there surrender charges or penalties for moving money?

5. Taking on too much or too little risk

Investing too aggressively can expose savings to large losses when you have less time to recover. Investing too conservatively may mean savings do not keep up with inflation over a long retirement. Many people adjust their mix over time with the help of a qualified professional.

6. Buying products you do not fully understand

Some financial products, such as certain annuities or complex investments, have features and fees that can be hard to understand. Take your time, ask for everything in writing and get a second opinion before committing.

7. Falling for investment scams

Common red flags include:

• Guaranteed high returns with little or no risk
• Pressure to act quickly
• Unsolicited offers by phone, email or social media
• Unregistered sellers or products
• Requests to keep the opportunity secret

You can check the background of brokers and investment advisers through FINRA BrokerCheck and the SEC's Investment Adviser Public Disclosure website.

8. Lending or giving more than you can afford

Helping family is natural, but large gifts or loans can affect your long-term security. Consider setting limits and talking openly with family about what you can afford.

9. Not naming a trusted contact

Many brokerage firms allow you to name a trusted contact person they can reach if they suspect financial exploitation or cannot contact you. This person does not get authority to make decisions, but it adds a layer of protection.

10. Not planning for incapacity

Having a durable financial power of attorney in place lets a trusted person manage your finances if you are unable to. Without it, family members may need to go to court.

Get trustworthy help

• Look for professionals who are fiduciaries, meaning they are required to act in your best interest.
• Verify credentials and check disciplinary history.
• Ask how they are paid.
• Consider fee-only financial planners for objective advice.

Terrameritavi is an independent publication. This article is general information, not financial or investment advice.