Retirement is supposed to be the reward at the end of a long working life. The travel plans, the slower mornings, the freedom to set your own calendar. Yet a surprising number of people find the early years of retirement more stressful than they expected, and the reason usually isn’t bad luck. It’s a handful of very specific financial decisions that looked harmless at the time.
A Nationwide Retirement Institute study found that more than half of retirees who retired in the last five years have regrets about how they saved for retirement. These aren’t abstract worries. Just two in five retirees say they’re on track with their original budget and decumulation plan, with another roughly one in five saying they’ve had to be more conservative with spending than planned since retiring. The patterns behind that stress are consistent enough to be useful. Here’s what retirees themselves say they wish they’d skipped.
1. Claiming Social Security Too Early
1. Claiming Social Security Too Early (Image Credits: Pexels)
You can apply for Social Security benefits at age 62, but the benefit you receive will be up to 30% less than it would be if you waited until the Social Security Administration's defined full retirement age. That permanent reduction tends to feel abstract in your early 60s and very real a decade later. If you can afford it, delaying your application until age 70 means your benefit will be about 32% higher than it would be at full retirement age.
The average Social Security payment per month in 2026 is $2,071, according to the Social Security Administration, and for those relying on it alone, covering monthly expenses can be difficult. When you layer a reduced early-claim benefit onto that modest baseline, you get a situation that becomes genuinely hard to reverse. Waiting, for most people who can swing it, is one of the highest-return financial decisions available in retirement.
2. Underestimating Healthcare Costs
2. Underestimating Healthcare Costs (Image Credits: Unsplash)
Healthcare is one of the most commonly underestimated expenses in retirement and one of the biggest sources of financial stress. Medicare premiums, supplemental insurance, prescription drugs, and out-of-pocket costs can add up quickly, and long-term care expenses in particular can have a significant impact on retirement savings if not planned for in advance. Many retirees assume Medicare covers most things. It doesn't.
Fidelity estimates that an average 65-year-old retired couple may need about $330,000 set aside to cover healthcare expenses in retirement, excluding long-term care. Even with Medicare, many retirees face significant out-of-pocket costs including premiums, copays, prescriptions, and uncovered services, and more than one in five retirees over 65 still carry medical debt. Building a dedicated healthcare line item into any retirement budget isn't pessimism. It's just math.
3. Overspending in the Early Years
3. Overspending in the Early Years (Image Credits: Unsplash)
Many new retirees see their early retirement years as a time to splurge, buying new cars, going on extravagant vacations, and giving generously to family members. While enjoying life is important, overspending too soon can lead to financial stress later. The problem is that retirement spending follows a curve, not a flat line. The "go-go years" in early retirement are often more expensive due to travel and entertainment, while the "slow-go years" tend to taper off before healthcare costs rise again in the "no-go years."
Retirees who encountered poor returns in the first five years of retirement and didn't adjust their spending downward were much more likely to exhaust their savings than those who came through the first five years with positive returns. Similarly, retirees who encountered high inflation early in retirement were also more likely to prematurely run out of funds unless they took steps to adjust their savings. The first five years set a trajectory that is genuinely hard to reverse.
4. Ignoring a Sustainable Withdrawal Strategy
4. Ignoring a Sustainable Withdrawal Strategy (Image Credits: Unsplash)
According to Morningstar's latest State of Retirement Income research, the long-standing "4% rule" no longer holds up as a reliable benchmark for new retirees seeking predictable, inflation-adjusted income. Morningstar now pegs 3.9% as the highest "safe" starting withdrawal rate for retirees who want steady, inflation-adjusted income over a 30-year retirement with a 90% chance of not running out of money. That's a meaningful difference from what many people were told to expect.
Pulling money from retirement accounts without a clear plan can lead to paying more taxes or depleting funds too quickly. Retirees who are willing to adjust spending, cutting back slightly in weak markets and spending more in strong ones, can safely start with withdrawal rates closer to 6%. These flexible strategies reduce the risk of overspending during market downturns, especially in the critical early years of retirement. Having a strategy matters far more than having a rule of thumb.
5. Carrying Debt Into Retirement
5. Carrying Debt Into Retirement (Image Credits: Unsplash)
Heading into 2024, about two in three retirees say they are in some form of non-mortgage debt, and the average retiree owes $15,393 in non-mortgage debt, with credit card debt playing a significant role. This creates immediate, compounding pressure on a fixed income. The burden of debt can quickly erode financial security, increase stress, and compromise the ability to enjoy a comfortable retirement, since options for earning more money are significantly limited compared to working years. One third of retirees regret not paying off debts sooner.
The math is fairly unforgiving. BLS consumer expenditure data shows average annual expenditures of $61,432 for households age 65 and older in 2024, and that gap between income and spending is one reason retirement can feel tight even when a household is technically above the median income level. Adding interest payments on top of that is a stress multiplier that retirees consistently say they wish they'd avoided.
6. Neglecting Tax Planning on Withdrawals
6. Neglecting Tax Planning on Withdrawals (Image Credits: Pexels)
Withdrawing from retirement plans lets you tap into all of the money saved over the years, but if you rush the process, you can end up with a much higher tax bill than expected. Strategic withdrawals let you maximize how much of your nest egg you access each year while minimizing the tax burden. This is one of those mistakes that feels invisible until you get your first tax bill in retirement and realize how much you've surrendered unnecessarily.
When adjusted gross income exceeds a certain amount, retirees pay higher Medicare premiums based on income for both Part B and Part D, and this extra tax that shows up as higher Medicare premiums must be factored into tax planning. Roth conversions, sequencing withdrawals across account types, and timing large distributions around low-income years are all real tools that can make a measurable difference in how far a nest egg stretches.
7. Going Too Conservative (or Too Aggressive) With Investments
7. Going Too Conservative (or Too Aggressive) With Investments (Image Credits: Pexels)
Some retirees move all their money into low-risk assets like bonds or savings accounts, fearing market volatility, while others, trying to make up for lost time or inflation, take on too much risk. The key is balance: a diversified portfolio tailored to your comfort level and time horizon can protect your principal while still providing growth potential. Both extremes carry real costs that often aren't felt until years later.
One of the biggest risks to financial planning is not stock market volatility but the rising cost of living. Even in retirement, most people need a significant allocation to stocks in order to maintain distributions in excess of cost-of-living increases. Relying solely on the S&P 500, meanwhile, may feel safe, but it exposes a portfolio to significant risk that could be reduced simply by spreading holdings across different asset classes. This lack of diversification was especially damaging during the "lost decade" of 2000 to 2010, when the S&P 500 delivered essentially no return excluding dividends.
8. Relying on a Single Income Source
8. Relying on a Single Income Source (ccPixs.com, Flickr, <a href="https://creativecommons.org/licenses/by/2.0/" target="_blank" rel="noopener">CC BY 2.0</a>)
Social Security can be a major part of your financial picture, but assuming that you will be able to live off of those payments alone may be a mistake. Leaning exclusively on one income source can result in a lot of hard decisions later down the road and may require selling financial assets when their prices have dropped. It's better to diversify income streams. This advice is simple in theory and frequently ignored in practice.
About half of retirees have less than $145,000 saved, and roughly one in eight rely solely on Social Security for income. That dependence creates fragility. Any unexpected expense, from a medical bill to a car repair, becomes a crisis rather than an inconvenience. Building even a modest secondary income stream, whether from part-time work, rental income, dividends, or an annuity, changes the entire risk profile of a retirement plan.
9. Falling Victim to Financial Scams
9. Falling Victim to Financial Scams (Image Credits: Pexels)
Financial scams targeting older Americans exploded in recent years, with nearly $4.9 billion in losses and 147,127 complaints in 2024 according to the FBI's Internet Crime Complaint Center. That represents a 46% jump in complaints and a 43% rise in total losses from just one year before. These are just the reported figures. The FTC also found more seniors than ever before are draining their savings and retirement accounts in fraudulent scams, and between 2020 and 2024, seniors who lost over $10,000 in one scheme increased by four times, with reports of those who lost $100,000 growing sevenfold.
Older adults may suffer more from these crimes financially because they often have more to lose and no recourse once their money is gone. If you're 75 and lose a chunk of your retirement savings, there's likely no way to make that back. Scammers now use artificial intelligence to enhance their deceptions, with generative AI allowing them to draft persuasive messages, while deepfake technology is being used to clone the voices and likenesses of victims' relatives and even celebrities to deceive people into transferring substantial funds. Skepticism is a legitimate financial defense strategy.
10. Skipping or Neglecting Estate Planning
10. Skipping or Neglecting Estate Planning (Image Credits: Unsplash)
Wills, trusts, and beneficiary designations can easily become outdated. Major life changes such as marriage, divorce, or new grandchildren can affect how assets are distributed, and reviewing these documents every few years ensures your legacy reflects your current wishes. It's one of those tasks that nearly everyone intends to get around to and many never do.
Family is often hard to refuse, but retirement savings are fixed and the ability to earn more money is severely reduced in retirement. Adult children are much better equipped to recover from financial difficulties, and unless you are certain you have the money to spare, avoiding large monetary gifts or loans after retirement is important. A proper estate plan doesn't just protect heirs. It protects the retiree from making emotionally driven financial decisions that quietly drain the very savings that were built to last a lifetime.