You’ve spent decades saving, investing, and otherwise managing your finances. But as retirement looms, a nagging question may creep in: What if my financial plan is wrong?
It’s a fair concern. One that we hear all the time.
Retirement isn’t necessarily a one-shot deal, but life doesn’t hand out mulligans if you suddenly realize your retirement savings can’t sustain your lifestyle — or that hidden costs like health care or taxes weren’t fully accounted for.
Many retirees learn the hard way that small mistakes (claiming Social Security too early, underestimating Medicare premiums, or prioritizing one type of retirement account) can snowball into big problems.
Fortunately, you don’t need to wait until the mistakes surface. By spotting the warning signs now, you can course-correct before the golden years begin.
Signs Your Retirement Plan Might Be Wrong
Your financial plan should feel like a compass — steady, reliable, and pointed in the right direction.
Some second-guessing is natural, but let’s make sure there aren’t any cracks beneath the surface.
Warning signs can be subtle: a lifestyle that slightly outpaces your projected income or investments that have strayed into a different risk profile. Catching them early can mean the difference between a secure retirement and one riddled with stress.
Your Spending Doesn’t Line Up With Your Retirement Income
One of the clearest signs of a flawed plan is a mismatch between what you expect to spend and what your income sources can reasonably provide.
Let’s say you plan to retire at 62. Your Social Security monthly benefit is projected at $2,100, and your spouse’s pension adds another $1,500. That’s $3,600 a month in guaranteed income. But if your cost of living — mortgage, utilities, groceries, and travel plans — runs closer to $10,000, you’ve got a sizable shortfall. One that could drain your retirement funds faster than you’d like.
In short, if your lifestyle demands more money than your retirement income streams can safely produce, it’s time to recalibrate.
You Haven’t Accounted for Healthcare
No one enjoys thinking about healthcare needs, but, in many cases, this line item is the silent budget-buster in retirement.
Medicare covers a lot, but not everything. And premiums, deductibles, and prescriptions add up quickly. Add in the potential need for long-term care insurance, home care, or even a nursing home, and the price tag can soar well beyond what many retirees anticipate.
A 65-year-old retiring today can expect to spend around $172,500 on health care in retirement, according to Fidelity. That’s before factoring in long-term care. Imagine needing home care services for just three years at $60,000 per year; that’s another $180,000.
If your plan doesn’t budget for those possibilities, you could be forced to dip heavily into your retirement nest egg or worse — not having enough funds to cover an unexpected medical need.
Your Accounts Lack Coordination
We’re hardwired to focus on dollar values, which drives many retirees to withdraw from retirement funds in the wrong order.
For example, let’s say you have $900,000 in a 401(k), $150,000 in a Roth IRA, and $125,000 in a taxable account. If you draw solely from your 401(k) because it’s the biggest amount of money, every dollar is taxed as ordinary income. That can bump you into a higher bracket, raise your Medicare premiums, and drain your retirement funds much faster.
Coordinating withdrawals across accounts — typically in the order of taxable accounts, tax-deferred accounts, and then Roth accounts — could stretch your money much further.
You’re Ignoring Taxes and Penalties
Taxes don’t stop when your paycheck does. If your plan doesn’t factor them in, you could be in for an unpleasant surprise.
Let’s pretend you’re newly retired and pulling $90,000 per year from your IRA to fund travel, hobbies, and everyday expenses. On paper, that feels sustainable. But those withdrawals are taxed as ordinary income — which could not only increase your federal and state tax bills but also push you into IRMAA territory, raising your Medicare premiums.
Or maybe you retired early at age 58, but now you’re considering pulling funds from your IRA. This could saddle you with both income taxes and a 10% IRS tax penalty.
If your financial plan glosses over tax timing, you may end up paying far more to government agencies than necessary.
Your Investments Don’t Match Your Risk Tolerance
It’s one thing to say you’re comfortable with market ups and downs. It’s another to watch your retirement account lose six figures in a downturn.
Imagine you retire with $1.2 million invested mostly in stocks. A 20% market drop could erase about $240,000 on paper. If you panic and sell, that loss becomes permanent — and your retirement nest egg shrinks dramatically.
On the flip side, keeping everything in cash or CDs might feel safe, but your money likely won’t outpace inflation. Over 20 or 30 years, that “safety” could cost you the ability to maintain your lifestyle.
If your portfolio swings make you lose sleep — or if your returns can’t keep up with your retirement goals — it’s a sign your risk tolerance and investment strategies are out of sync.
You Haven’t Protected Against Scams or Loss
Unfortunately, retirees are prime targets for fraud, and even well-intentioned savers sometimes overlook basic protections.
We’ve seen it — you get a call from someone claiming to be with the IRS, demanding immediate payment. Or maybe you’re pitched an “exclusive” investment product with guaranteed double-digit returns.
A sound retirement plan not only seeks sustainable growth but also guards against threats that can undo years of diligent saving.
The Biggest Retirement Planning Mistakes to Avoid
Planning for a multi-decade, multi-variable phase of life like retirement is not easy. Mistakes can and do happen.
Claiming Social Security benefits too early.
Starting retirement benefits at 62 locks in a monthly payment that’s up to 30% smaller than if you’d waited until full retirement age. Over a 25-year retirement, that can mean tens of thousands in lost income. While every individual’s situation is different, we typically recommend waiting to claim so you can lock in higher guaranteed payouts.
Underestimating health care expenses.
If you don’t budget for premiums, prescriptions, or the possibility of long-term care, you may be forced to dip into savings too quickly.
For those who have a qualifying plan, we recommend making regular contributions to a health saving account (HSA) — one of the few accounts with a triple tax advantage. Contributions go in tax-deductible, the money grows tax-free, and withdrawals for qualified medical expenses are also tax-free.
Even better, unlike flexible spending accounts, HSAs aren’t “use it or lose it.” Balances can roll over year after year and even be invested, giving you a dedicated, tax-efficient pool of money to cover health care expenses in retirement. That’s especially valuable when you consider how much costs tend to rise with age.
Overconcentrating in one type of retirement account.
Taxes are a big variable in retirement. Flexibility is the best way to control your annual tax liability. Translation: a mix of savings accounts, brokerage accounts, tax-deferred accounts, and Roth accounts can help you manage year-to-year income fluctuations without running up your tax bill.
Failing to stress-test your investments.
A “successful” portfolio is one that enables you to achieve your retirement goals. Typically, that’s leading a desirable lifestyle and possibly leaving a legacy for the next generation.
A portfolio that’s too aggressive is more susceptible to sequence of returns risk — the chances of stepping into a market downturn right after you retire and permanently damaging your portfolio’s longevity. A portfolio that’s too conservative may not keep pace with inflation or support your long-term needs.
Skipping estate and legal planning.
This is usually one of the biggest mistakes we see people make. Your estate plan is a love letter to your family. Without a will or updated beneficiary designations, state intestacy laws decide who inherits your assets. That can mean outcomes you never intended — and more stress for everyone during an already emotionally difficult time.
How to Fix a Faulty Financial Plan Before Retirement
Spotting the cracks is only half the battle. The real progress comes from addressing them head-on.
1. Get a Professional Review
Even the best DIYers miss things. A fiduciary financial advisor or tax adviser can stress-test your plan against scenarios you might not have considered — a market downturn, higher health care expenses, or living longer than expected.
For instance, an advisor may run a Monte Carlo simulation on your portfolio and discover that your current withdrawal strategy has only a 60% success rate. With a few adjustments, that probability can be improved.
2. Reassess Your Retirement Goals
Your financial goals from ten years ago may not match your lifestyle priorities today.
Maybe your original plan was built around downsizing at 65. But now you’d prefer to stay in your home and travel more. That change affects how much income you’ll need — and how your retirement accounts should be structured.
Revisiting your goals helps ensure your savings and investments are working toward the right destination.
3. Build Flexibility Into Your Plan
Retirement rarely follows a straight line. By using a guardrails approach, you adjust spending up or down depending on how markets perform, rather than sticking to a rigid withdrawal rate.
For instance, if your portfolio grows in a strong year, your plan enables you to withdraw more funds (perhaps enough for a European vacation). If it dips, you scale back discretionary spending to preserve your nest egg.
Flexibility extends the life of your savings and reduces stress.
4. Protect Your Assets and Income Streams
Growth matters, but so does defense. That means diversifying investments, planning for long-term care, and putting basic legal protections in place.
For instance, earmarking a portion of your Roth IRA for potential home care costs can prevent medical expenses from disrupting your broader plan. Meanwhile, updating beneficiary designations ensures your assets transfer the way you intend, without the delays of probate.
A Flawed Plan Doesn’t Mean a Flawed Retirement
Most plans aren’t “wrong” all at once — they just have weak spots that, if left unchecked, can escalate into bigger problems.
By reviewing your spending against your income, planning realistically for health care, coordinating accounts, and avoiding common retirement mistakes, you can turn doubt into lasting financial security.
If you’re unsure whether your plan passes the test, a fiduciary financial advisor can help spot the cracks and put you on a stronger path. At Pine Grove, we’ve helped thousands of Minnesota families move from second-guessing to confident planning.
Ready to stress-test your retirement strategy and build a plan you can trust? Reach out to the Pine Grove team, we’d love to sit down with you and chart the best path forward.
