What Is The #1 Biggest Retirement Mistake?

You’ve worked hard, and retirement is on the horizon, but one mistake could undo it all.

In this article, we’ll consider what many financial professionals agree is the number one biggest retirement mistake and what you can do to protect yourself.


  • The biggest mistake you can make in retirement is time-related. It’s underestimating how long you’ll live and the impact of inflation on your retirement savings. 
  • Getting a guaranteed income in retirement (no matter how long you live) through an annuity can help ensure you never run out of money in retirement.
  • It’s important to consider the growth an annuity gives you to keep up with inflation

Need help choosing the best annuity for retirement? Have questions about getting an annuity? If so, it’s best to speak with an annuity specialist. Watch this short video to see how I can help you do this (at no cost to you!)

The biggest retirement mistake

Retirement is a phase of life that many of us eagerly anticipate. But what happens when we get there and realize that our retirement savings may not last as long as we had hoped? A common oversight many retirees make is not accurately estimating their potential lifespan.

Statistical evidence shows that women who are currently between the ages of 65 and 69 expect to live until about age 80. However, the actual likelihood is that more than 75% will surpass this expectancy.

This underestimation can have serious financial implications and is one of the common retirement mistakes. Many retirees prioritize concerns over market volatility, overlooking the more significant risk of outliving their life expectancy.

Additionally, the effects of sizable impact inflation on retirement savings are often grossly underestimated, exacerbating the financial challenge of an extended retirement lifespan.

Thus, the most glaring mistake in retirement planning is a two-fold misunderstanding of both lifespan expectancy and the role of inflation in determining the need for robust savings to cover living expenses.

Longevity in Retirement

As people live longer, retirement planning is evolving into longevity planning. This comprehensive strategy takes into account a wide array of personal, familial, and societal factors.

Today, those over 65 are not simply retiring and going into a life of leisure. Instead, they’re frequently redefining this phase of life, often seeking to reinvent their roles post-retirement, making a solid retirement plan more important than ever.

The number of U.S. centenarians is expected to rise to over 400,000 by 2054, with men constituting about one-third of this demographic. This demographic shift exemplifies the increasing trend of longer lifespans.

Unfortunately, many retirees underestimate their potential lifespan, frequently expecting to live until only about age 80. This underscores the importance of precise life expectancy predictions in retirement planning.


One of the most silent threats to your retirement savings is inflation. Inflation has historically eroded the real value of money over time. Your retirement account, no matter how large, can be significantly reduced by inflation if those savings do not keep pace with the rising cost of living.

This is particularly the case for pension plans that frequently lack proper inflation adjustments, resulting in an inability to keep up with the real increase in living costs. However, your retirement savings can be protected from inflation.

This can be achieved by investing in assets tied to inflation or by creating a diversified portfolio of income streams to offset inflation’s effects.

Guaranteed Income Streams: The Annuity Solution

Consider annuities. These insurance products are engineered to ensure a consistent income for life, offering financial stability for retirees. They serve as a safeguard during times when the market is down and other income sources might be affected.

When set up correctly, annuities can also project you against inflation.

To learn more about securing your retirement with annuities, watch this video.

The Basics of Annuities

Annuities are essentially insurance contracts. You pay a premium in exchange for receiving income payments from the insurance company at a future date. Funding for annuities can be achieved either by a lump sum or regular payments, and they may offer either fixed or variable cash flows during retirement.

Fixed annuities are a popular choice among retirees. They’re insurance products that provide stable payments and offer a balance between fixed income and the growth potential of investments.

Timing Your Annuity Income

When it comes to annuities, timing is key. Immediate annuities begin to provide income immediately after investment, whereas deferred annuities start to distribute income at a later, predetermined date.

By strategically purchasing annuities to activate at various points throughout retirement, retirees can manage their income needs and protect themselves from inflation.

This strategy, known as annuity laddering, can help retirees take advantage of variable interest rates and market conditions over time while preserving income consistency.

To address inflation during different phases of retirement, many retirees opt to purchase multiple annuities and initiate income streams at varying intervals.

Annuities and Long Term Care

Let’s not forget long-term care. Long-term care annuities are designed to cover expenses when the policyholder requires long-term care due to medical conditions.

These annuities can be particularly beneficial for individuals with pre-existing health conditions who may not be approved for separate long-term care insurance policies.

Long-term care annuities can offer monthly benefits in the form of payments in monthly installments or as a lump sum, with the option of choosing fixed growth for a guaranteed rate of return.

What’s more, if not used for long-term care, the annuity still provides retirement income, making their premiums more affordable than separate long-term care insurance.

Preparing for Healthcare Costs

Healthcare costs can be a significant financial burden in retirement, with both expected expenses and the potential for unexpected medical costs. While Medicare provides foundational coverage, it does not cover all healthcare costs such as:

  • Vision
  • Hearing
  • Dental
  • Extensive long-term care

This makes supplemental insurance like Medigap a consideration for comprehensive coverage.

Signing up for Medicare during the initial enrollment period is vital to prevent enduring late penalties, and to guarantee retirees obtain their healthcare coverage when qualified.

For those retirees who are not yet 65 and ineligible for Medicare, leveraging High-Deductible Health Plans in conjunction with Health Savings Accounts can be an effective strategy to manage healthcare costs.

Maximizing Social Security Benefits

Enhancing your Social Security benefits is an effective strategy to maximize your retirement income. Waiting until full retirement age or delaying up to age 70 can significantly enhance Social Security benefits, with increases of up to 8% per year.

There are also strategies for married individuals or those previously married. In the case of a partner’s death, the surviving spouse receives only the higher of the two benefits, thus the higher-earning partner benefits from waiting longer to claim Social Security.

Married individuals can access spousal benefits worth up to 50% of the partner’s eligible amount, and this is also applicable to divorced individuals on their ex-spouse’s earnings.

Therefore, understanding your Social Security benefits and making strategic decisions can greatly contribute to your retirement income.


Retirement planning requires careful consideration of life expectancy, inflation, healthcare costs, and investment decisions.

It involves diversifying income sources, maximizing Social Security benefits, and having  guaranteed income streams in retirement.

Booking a call with an annuity expert can provide personalized guidance on annuity strategies and help you make informed decisions about your retirement income.

I can help you:

  • Determine the best solution for your unique circumstances
  • Navigate and make crucial decisions during your financial journey
  • Find the best annuities for your unique situation

By clicking here to schedule a call, I can take a look at specific annuity options and strategize on how to minimize surrender charges. 

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