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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> Financial planners help people make better retirement<\/a> decisions, but through their years of experience, they often see the same mistakes play out over and over again. While working with a certified financial planner (CFP) can give you more clarity, you can get a lot of mileage out of your current financial plan if you avoid some of the most common mistakes.<\/p>\n Matthew Boersen, CFP, is the managing partner of Straight Path Wealth Management<\/a> and served as the 2024 chair of the Board of Directors for the CFP Board. He shared with GOBankingRates some of the biggest retirement mistakes people will regret<\/a> in 10 years.<\/p>\n<\/p>\n Choosing the Wrong Investment Allocation<\/p>\n Portfolio construction isn\u2019t something that you set and forget. It\u2019s a process that evolves as your financial situation and long-term goals change. Boersen explains how choosing the wrong asset allocation can hurt retirees.<\/p>\n \u201cWe see this mistake happen on both extremes,\u201d he said. \u201cSome retirees get so nervous that their 401(k) [plan] or IRA needs to provide income for the rest of their life, that they can not stomach the possibility of the portfolio dropping. Because of this, they overemphasize conservative investments and stunt the needed growth in the portfolio long-term.\u201d<\/p>\n \u201cAlternatively, we see retirees get excited about significant market gains and thereby take on too much risk in the portfolio<\/a>, exposing themselves to substantial market losses, which could result in them having to return to work part-time or significantly reduce their spending,\u201d Boersen concluded.<\/p>\n Not Optimizing for Taxes in Retirement<\/p>\n You\u2019ll have to pay taxes for the rest of your life, but if you don\u2019t continue to stay on top of them in retirement, you can end up owing a lot more than necessary.<\/p>\n \u201cMany retirees are used to being W-2 employees, with only a few basic tax planning techniques at their disposal. However, many people do not realize that when they transition to retirement, they receive much more control over how much taxable income they recognize and the timing of that,\u201d Boersen said.<\/p>\n He suggested blending their retirement withdrawals<\/a> between pre-tax, Roth and non-retirement accounts to minimize how much they end up paying.<\/p>\n<\/p>\n \u201cDetailed tax planning for not only the current year but with the next 15 [to] 20 years in mind, can often save 10% or more in taxes,\u201d Boersen said.<\/p>\n Not Updating Their Estate Plan<\/p>\n Not updating your estate plan<\/a> can create unnecessary complexities for your heirs, and it\u2019s best to have it written in detail. Boersen recommends reviewing your key estate details every three to five years and explains what the review process should look like.<\/p>\n \u201cThis includes rereading your trust to ensure the distributions outlined fit your desired goals, making sure your power of attorneys, wills and healthcare documents still carry out your wishes, and ensuring your beneficiary designations on retirement accounts and life insurance are correct. Retirees commonly think that updating their trust automatically updates their IRA or 401(k) beneficiary designations, which is not true,\u201d he said.<\/p>\n Not Creating a Budget<\/p>\n If you don\u2019t know your monthly expenses, you risk outliving your nest egg. Once you create a budget, you must stick with it, as Boersen explains.<\/p>\n![\"\"](\"https:\/\/cdn.gobankingrates.com\/wp-content\/uploads\/2023\/11\/icon-20.svg?webp=1&quality=75\"){kind=icon}
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