The 3 Most Common Retirement Mistakes And How To Avoid Them

Your Money Journey: Lisa Sakai

When it comes to planning for retirement—or what I prefer to call financial freedom—many of us are flying blind. We save a little here, invest a little there, cross our fingers, and hope it all works out. But hope isn’t a strategy. You might be unknowingly making mistakes that could cost you dearly down the road.

Let’s dig into three major mistakes that people frequently make with their retirement planning and, more importantly, how you can avoid them.

What Does Retirement Really Mean?

Before diving in, let’s redefine “retirement.” For some, the word sparks joy but for younger generations like Millennials and Gen Z, it can be a triggering term. Either they don’t believe they will ever get to retirement or the idea of saving every penny now and enjoying life later is not appealing.

Instead, think of retirement as financial freedom—the point where you can do what you want, when you want, without money being a barrier. Financial freedom can mean a lot of different things for different people, but the goal is the same: security, choices, and a life you love.

So, when you hear “retirement” in this context, think flexibility and independence.

“Financial freedom can mean a lot of different things for different people, but the goal is the same: security, choices, and a life you love.“

3 Most Common Retirement Mistakes:

Mistake #1: Ignoring Taxes in Your Plan:

Many people fall into focusing only on tax-deferred accounts to save to, assuming they’ll just “deal with taxes later.” This can be very short term thinking and can backfire.

Here’s the issue: tax-deferred accounts like 401(k)s and traditional IRAs save taxes now, but every dollar you withdraw in the future is taxed as income. If you retire at 55 and need to dip into these accounts, you could also face a 10% early withdrawal penalty before age 59½.

What you can do instead:

• Diversify where you are saving. Consider adding a Roth IRA or a regular brokerage account to your strategy. Roth accounts grow tax-free and can be withdrawn tax-free after 59½. Brokerage accounts offer flexibility—you can withdraw funds anytime without penalties but do need to pay capital gains tax on growth that has been invested for at least a year and a day. Capital gains tax for many is 15%. 
• Plan for tax changes. Taxes may feel high now, but historically, they’ve been much higher. Just take a look at the tax rates in the 1970s. Be ready for potential future hikes crossing your fingers for lower tax rates in the future. Thinking about how you are going to take your money in the future is a big part of your action plan today. Also, keep in mind, that if you are a business owner, your deductions could go down dramatically, so you will need to plan for that. 

A well-rounded tax strategy isn’t about avoiding taxes altogether—it’s about maintaining flexibility and reducing surprises down the road.

Mistake #2: Underestimating Your Future Expenses:

When planning for retirement—or financial freedom—many people grossly underestimate how much money they’ll need. It’s easy to downplay your monthly budget when you’re guessing, but in reality, many expenses stick around or even increase.

Here’s another kicker: health care is one of the biggest unknowns. If you retire before age 65, you’ll need to cover health insurance out of pocket, which can get very expensive. Even after qualifying for Medicare, premiums, co-pays, and other costs add up. No one can predict exactly what health care will cost in the future, but it’s better to estimate on the high side.

“Here’s another kicker: health care is one of the biggest unknowns.”

What You Can Do Instead:

• Start high, then adjust. If you’re not sure about your monthly expenses, err on the side of caution. I’ve never been told that someone was mad because they saved too much.

A little honesty with yourself now can save you a lot of stress later. Knowing your true expenses is one of the best ways to create a realistic and sustainable plan.

Mistake #3: Putting All Your Eggs in One Basket:

Diversification isn’t just a buzzword—it’s essential. Yet many people rely heavily on a single type of account or investment. Whether it’s putting everything into a 401(k), buying one hot mutual fund, or banking entirely on real estate, concentrating your assets is risky.

Multiple income streams and asset types provide more flexibility. Having diverse holdings means you’re better equipped to handle changes in the market, unexpected expenses, or opportunities you want to take advantage of.

What you can do instead:

• Mix it up. Spread your money across different types of accounts—401(k)s, Roth IRAs, brokerage accounts, savings, real estate, and even nontraditional investments.
• Plan for different timelines. Not all your investments should have the same goal. While some might be earmarked for long-term growth, others could provide short-term liquidity or income.

Diversification is like having different tools in your toolbox. The more tools you have, the more prepared you’ll be to handle whatever life throws your way.

Common And Avoidable:

These three mistakes are common but avoidable. The good news? It’s never too late to make amendments to your planning. Start by understanding what financial freedom means to you. Then, create a balanced, flexible plan that supports your vision. 

Take the reins today, and stay the course toward living the life you’ve always dreamed of.

Note: Investment advice offered through Integrated Financial Partners, doing business as One Vision Retirement, a registered investment advisor. The information in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. Integrated Financial Partners does not provide legal/tax advice or services. Please consult a qualified legal/tax advisor regarding your specific situation.

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About the Author:

Lisa Sakai is a Financial Consultant who works with clients on Bucket List Acceleration and getting to live the life they want now. As the co-founder of One Vision Retirement, she has been working with clients across the country for over 12 years. Lisa’s advice provides easy to understand, logical steps and exercises that people can take action on right away. Learn more about Lisa Sakai here at One Vision Retirement.

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