Most retirement advice focuses on one thing: saving as much as you can. Many estimates show that you may need about $1 million to retire comfortably in many states, and up to $2 million in more expensive places like Hawaii (1).
But here’s the problem: Most Americans don’t come close to those numbers. Fidelity data shows that the average person approaching retirement (ages 55 to 64) has about $200,000 saved, far less than experts say is needed. Younger workers are even further behind: the under-35 group has an average of just $45,000 in retirement accounts (2).
And even if you manage to build up a solid savings, saving enough is only half of the equation. What happens after you retire can be just as important. Here are six mistakes many Americans make with their retirement savings.
Even well-prepared retirees can inadvertently spend their savings too quickly. The biggest mistakes can be really costly, so here’s a breakdown of what they are and how you can avoid them:
It’s easy to assume that if you retire with $1 million or $2 million saved, you’ll have enough to “take what you need.” But random withdrawals add up quickly. Let’s say you retire with $1 million and decide to withdraw money as expenses arise: $4,000 for a vacation, $2,000 for home repairs, $1,000 for gifts.
If you average $2,000 per month in sporadic withdrawals, that’s an extra $24,000 a year, or 2.4% of your portfolio. Those withdrawals accumulate on top of regular living expenses, so you could still end up withdrawing much more than planned, especially in years with big surprise costs.
When the market falls, selling to fund withdrawals means you are locking in losses. If your portfolio drops 20% and you withdraw $50,000 to cover living expenses, that money has no chance of being recovered when the market recovers.
Experts usually suggest keeping one or two years of expenses in cash so that crises do not force decisions to be made at the worst moment. Without that cushion, retirees could inadvertently reduce their portfolio at the worst possible time.
Switching to safer investments in retirement is reasonable, but becoming 100% conservative can backfire. A conservative portfolio earning only 2% annually will struggle to keep up with inflation. Instead, a portfolio that holds between 30% and 60% in stocks, as financial planners often recommend, can offer better long-term growth and help preserve purchasing power.
Filing at age 62 permanently reduces benefits often by 25% to 30% (3). That smaller monthly check means you’ll need to make larger withdrawals from your retirement savings to fill the gap. For example, if you had received $2,000 per month at age 67, claiming at age 62 could reduce that amount to about $1,400. Over 20 years, that’s a difference of $144,000 and that money has to come from your investments.
Health care is one of the largest retirement expenses, with costs expected to reach $172,500 per retiree over their later life (4). If you don’t review your Medicare plans each year, you may end up paying more than you need to for premiums or prescriptions.
Plan forms and prices change annually, and what was best last year may no longer be the most cost-effective option.
Many retirees assume that their budget will remain stable. But travel, gifts, family support and rising health costs can gradually inflate spending. If expenses increase by even $500 a month, that’s $6,000 a year, which is equivalent to an extra $150,000 withdrawn over a 25-year retirement.
Read more: This is the quiet portfolio shift many wealthy investors are making in 2026. Should you consider it too?
The mistakes mentioned above may seem small, but the impact can add up quickly. However, the right habits can quickly put you back on solid ground. Here’s what you need to do to stay on track:
A retirement plan can help your money last. Whether it’s the 4% rule or a more flexible approach, the key is consistency, not guesswork. Consider working with a financial advisor to plan your annual withdrawal limit.
Budgeting may not be fun, but knowing exactly where your money is going will help you avoid overspending. If you find that your monthly expenses are increasing, make adjustments early rather than waiting for a financial shock to hit.
A year or two of living expenses cash in your emergency fund can help you weather market shocks without hitting your investments at the wrong time.
Both programs can shape your retirement budget for decades. Use online calculators or talk to a financial planner to understand how timing affects your benefits.
Whether you’re 30, 50, or 65, retirement planning isn’t “set it and forget it.” Track your savings rate, rebalance your investments, and review your target figure annually.
If you avoid these common mistakes and stay proactive with your planning, you’ll have a much better chance of enjoying retirement the way it was meant to: with less stress, more freedom, and confidence that your money will last.
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CNBC (1); Fidelity (2); Social Security Administration (SSA) (3); Fidelity (4).
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
