![\"Seniors](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/08\/14-seniors-wavebreakmedia-shutterstock_236125216.jpg\")
<\/p>\n <\/p>\n
\n wavebreakmedia \/ Shutterstock.com <\/p>\n
Commitment to Our Readers<\/p>\n
GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines<\/a> and our products and services review methodology<\/a>.<\/p>\n 20 Years<\/strong> Trusted by<\/strong> 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 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<\/p>\n Tapping Into Retirement Accounts Too Early<\/p>\n 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 Claiming Social Security Too Soon<\/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 Underestimating Taxes<\/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<\/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 Choosing the Wrong Asset Locations<\/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 \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 Overvaluing Your Investments<\/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![\"\"](\"https:\/\/cdn.gobankingrates.com\/wp-content\/uploads\/2023\/11\/icon-20.svg?webp=1&quality=75\"){kind=icon}
<\/p>\n
Helping You Live Richer<\/p>\n![\"\"](\"https:\/\/cdn.gobankingrates.com\/wp-content\/uploads\/2023\/11\/icon-experts-review.svg?webp=1&quality=75\"){kind=icon}
<\/p>\n![\"\"](\"https:\/\/cdn.gobankingrates.com\/wp-content\/uploads\/2023\/11\/icon__trusted.svg?webp=1&quality=75\"){kind=icon}
<\/p>\n
Millions of Readers<\/p>\n