{"id":180754,"date":"2025-08-27T21:41:13","date_gmt":"2025-08-27T21:41:13","guid":{"rendered":"https:\/\/www.europesays.com\/us\/180754\/"},"modified":"2025-08-27T21:41:13","modified_gmt":"2025-08-27T21:41:13","slug":"retiring-in-2026-6-financial-traps-to-avoid-at-all-costs","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/180754\/","title":{"rendered":"Retiring in 2026? 6 Financial Traps To Avoid at All Costs"},"content":{"rendered":"\n

Over the next few years, more than 4 million Americans will reach the age of 65 each year, according to a study<\/a> from the Alliance for Lifetime Income and the Retirement Income Institute. But is this demographic, deemed \u201cpeak boomers,\u201d ready for retirement? The study revealed that more than half (52.5%) of baby boomers nearing the age of 65 have less than $250,000 in assets for retirement.<\/p>\n<\/p>\n

Even if you have millions saved, you can still fall victim to financial mistakes that can eat into your retirement savings. Whatever your portfolio looks like right now, avoid these traps if you\u2019re preparing for retirement in 2026<\/a>.<\/p>\n

Find Out: How Far $1.5 Million in Retirement Savings Plus Social Security Goes in Every State<\/a><\/strong><\/p>\n

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You\u2019ve saved and invested for retirement throughout your career. Now that the day has come, you might think it\u2019s time to tap into your 401(k)<\/a> or IRA immediately.<\/p>\n

But experts said this is a mistake. \u201cDoing so early can trigger taxes and penalties,\u201d said Tansley Stearns<\/a>, Community Financial Credit Union president and CEO. \u201cNot only does this reduce your retirement nest egg, but you also lose out on potential growth.\u201d<\/p>\n

Instead, speak to a financial advisor about the best ways to stretch your retirement income through other forms of savings.<\/p>\n

Discover More: The 7 Best Retirement Towns You\u2019ve Never Heard Of (but Should Consider in 2025)<\/a><\/strong><\/p>\n

Likewise, many retirees are tempted to tap into Social Security benefits<\/a> as soon as they turn 62. But this leads to a permanent reduction in your monthly benefits, according to experts.<\/p>\n

Lisa A. Cummings, Esq., attorney and executive vice president at Cummings & Cummings Law<\/a>, recommended using the Social Security benefit calculator<\/a> online to compare your monthly benefit at your current age, full retirement age (FRA) and age 70.<\/p>\n

\u201cWaiting until full retirement age, or even later, can mean significantly more income for life,\u201d Cummings said.<\/p>\n

\u201cTaxes don\u2019t disappear when your paycheck does,\u201d Cummings pointed out. \u201cWithdrawals from traditional IRAs, 401(k)s and certain pensions are taxed as income. Social Security may also be taxable.\u201d<\/p>\n

Before you make a move, speak with a tax advisor to estimate your annual taxable income and consider tax strategies that can reduce those obligations, such as Roth conversions.<\/p>\n

Strategic asset location, or the practice of getting investments into the right types of accounts, is another way to minimize taxable income in retirement, according to experts.<\/p>\n

Story Continues <\/p>\n

\u201cFor most people, we want to locate the assets we expect to grow the most (e.g., stocks) in Roth accounts, if available. This way, all of the future growth would not be taxed, as Roth accounts grow tax-free and distributions from Roth accounts are also tax-free,\u201d said Aaron Brask, financial planner at Aaron Brask Capital<\/a>.<\/p>\n

He also suggested placing some higher-growth assets in a taxable brokerage account, which would be taxed at the capital gains rate \u2014 typically lower than the marginal tax rates for income. \u201cAsset location is a subtle but impactful tax strategy<\/a> that many people miss,\u201d he said.<\/p>\n

You don\u2019t want to see your retirement income disappear due to taxes. But you also don\u2019t want to see your investments diminish in a down market. The stock market inevitably has ups and downs. Can your retirement portfolio weather those changes?<\/p>\n

\u201cWe might be on a bull market run, and people see these big [balances in their] accounts, so they might retire early,\u201d said Mark Connely, CFP with Wealth Design Group<\/a> in Houston, Texas. He recommended doing a \u201cstress test\u201d to see what would happen if your portfolio dropped by 20% or more. Can you live comfortably on that amount?<\/p>\n

\u201cTake 70% of the value you have right now and see if it delivers the income you want,\u201d Connely suggested. \u201cAlso, make sure you\u2019ve got three to five years of income set aside somewhere safe, secure and liquid so that even if there was a market correction, you can wait it out.\u201d<\/p>\n

While it\u2019s smart to keep an emergency savings account to help manage market swings, you want to make sure most of your investments can keep pace with inflation over time. \u201cEnsure your retirement strategy includes investments that outpace inflation to maintain your standard of living,\u201d Stearns said.<\/p>\n

Cummings recommended working with an investment advisor to choose allocations that can offset rising costs. \u201cReview yearly to adjust as needed,\u201d she said.<\/p>\n

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This article originally appeared on GOBankingRates.com<\/a>: Retiring in 2026? 6 Financial Traps To Avoid at All Costs<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Over the next few years, more than 4 million Americans will reach the age of 65 each year,…\n","protected":false},"author":3,"featured_media":180755,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[64,102044,102043,255,706,711,96339,67,132,68],"class_list":{"0":"post-180754","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-cummings","10":"tag-lisa-a-cummings","11":"tag-personal-finance","12":"tag-retirement-income","13":"tag-social-security","14":"tag-tansley-stearns","15":"tag-united-states","16":"tag-unitedstates","17":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115102907338776318","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/180754","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=180754"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/180754\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/180755"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=180754"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=180754"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=180754"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}