Saving for retirement and generating income once you're in retirement are two very different skills. Plenty of people who did everything right on the saving side still run into avoidable mistakes once it's time to actually turn those savings into a paycheck. Here are five of the most common retirement income mistakes, and how to steer around them.
1. Claiming Social Security too early without a plan
Claiming Social Security as early as possible, at age 62, permanently reduces your monthly benefit compared to waiting until your full retirement age — and delaying past full retirement age, up to age 70, permanently increases it. That doesn't mean everyone should wait until 70; the right claiming age depends on your health, other income sources, and whether you're still working. The mistake isn't claiming early — it's claiming early without running the numbers on how that decision affects your income for the rest of your life, especially for married couples where coordinating both spouses' claiming strategies can meaningfully change total lifetime income.
2. Ignoring sequence of returns risk
Sequence of returns risk is the danger of experiencing a market downturn early in retirement, right when you start withdrawing from your portfolio. Selling investments at a loss to fund withdrawals in those early years can permanently damage how long your savings last, even if the market fully recovers later — because you've locked in losses on money you've already spent. A bucket strategy, which separates near-term spending needs from long-term growth investments, is one common way to reduce this risk by avoiding forced sales during a downturn.
3. Treating all savings the same way
Not all of your retirement savings need to serve the same purpose. Money you'll need in the next one to three years, money you'll need in five to ten years, and money you won't touch for a decade or more all have different jobs to do, and arguably should be held differently. Lumping everything into one undifferentiated pile of investments — and drawing from whatever's convenient — makes it harder to manage risk and can leave you exposed at the worst possible time.
4. Overlooking guaranteed income options
Many retirees rely entirely on portfolio withdrawals to supplement Social Security, without considering options that create additional guaranteed income. A fixed indexed annuity with an optional income rider, for example, can convert a portion of your savings into a stream of income designed to last for your lifetime, regardless of market performance. That guaranteed floor can reduce the pressure on the rest of your portfolio and provide peace of mind that essential expenses are covered no matter what the market does.
5. Not planning for long-term care costs
Long-term care is one of the largest unplanned expenses in retirement, and Medicare generally does not cover ongoing custodial care. Failing to plan for this possibility can mean an extended care need drains savings that were meant to last decades. Planning ahead — whether through traditional long-term care insurance, a hybrid life/LTC policy, or simply setting aside a dedicated reserve — can prevent a health event from derailing an otherwise solid retirement income plan.
Bonus mistake: not revisiting the plan
A retirement income plan built once and never revisited is almost guaranteed to drift out of date. Tax laws change, market conditions shift, health changes, and personal goals evolve. What made sense the year you retired may not make sense five or ten years later. Building in a regular check-in — annually, or whenever a major life event occurs — helps catch small adjustments before they become larger problems, whether that's revisiting your withdrawal rate, reconsidering an income rider, or updating your long-term care approach as your health picture changes.
Putting it together
None of these mistakes are complicated to avoid once you know to look for them — the real risk is not knowing they exist until it's too late to course-correct. A retirement income plan built around your specific Social Security timing, guaranteed income options, investment structure, and long-term care strategy can help you avoid all five.
A quick self-check
Before your next open enrollment or annual financial check-in, it's worth asking yourself a few questions: Do I know exactly when I'm planning to claim Social Security, and why? Do I know how much of my portfolio is in cash or stable holdings versus growth investments, and whether that split matches how soon I'll need the money? Do I have any source of guaranteed income beyond Social Security? And do I have a plan — any plan — for the possibility of needing long-term care? If any of those answers are "I'm not sure," that's usually a sign it's worth sitting down with a licensed agent to build out a written retirement income plan rather than continuing to wing it.
Learn more on our Retirement Income Planning page, or schedule a free consultation to build a plan around your specific situation.