6 Biggest Retirement Mistakes – Don’t Do These!

If you’ve read my pathetic story, you already know I used to put myself in the ‘not so smart’ category.  Truly ignorant, and for a number of reasons.  Don’t get me wrong, I’m not beating myself up, and I’m fine.  Really.  I just didn’t save properly for my future.  I don’t know what I was thinking, other than I “wasn’t thinking”.  I guess I thought I’d live forever, be employed for ever, or somehow strike it rich and win the lottery.


Oh, at one time I did have a nice little nest egg incubating.  Then I made a horrible mistake at age 40 and cashed out – that’s just south of 20 years ago.  By the time I paid the 10% tax penalty, and had the taxable amount included as my taxable income…I was screwed – and owed Uncle Sam a HECK of a lot of money I didn’t have.


Well take a look; here’s an example of how it all panned out:

My 10% penalty for early withdrawal was almost $7,000.  Then, there was the federal tax withholding and state tax requirements!

Yeah.  I owed the federal government an additional $13,000 after my penalties!  Gee Whiz.  I thought my tax guys head was gonna explode.  It took me forever to pay that off too.

When I left my employer – I should have rolled it over.  But since the idea of that was confusing…I just took the money and ran.  You want to know how much I’d have now if I’d rolled it over?  My IRA would be worth potentially $170,000.  “CUSS WORD”!!

The passing decades have seen me grow smarter and now I understand how I got myself in such a conundrum over my finances.  First off, I know you don’t believe me…but I’m actually pretty smart.  Smart in general and smart with money.  I must have had some serious brain drain going on – seriously.  I know there are some of you out there in the same boat.  Don’t be embarrassed or discouraged – dig in, find help and fix it!

So, here is where I start.  And as you read through my top 6 mistakes you should NEVER make – please, please, please promise me:  You’ll talk to your tax consultant or your financial advisor and get a plan before you even breathe a thought of touching your money.  FOR THE LOVE OF PETE…GET A PLAN!!  Ok.  Am I clear?  I just want you to be okay and live retirement the way you deserve.

Mistake 1.  Cashing Out Your Pension Earlybank-820160_1920

Firstly, you have to be a minimum age of 59 1/2 before even touching that money.  According to Fidelity Investments, 1 in 3 401(k) investors cashed out of their plan before reaching age 59½, usually done after a job or career change.  Like I did.  I assume they did it for noble reasons, like – paying off credit card debt, or paying off their car note, maybe paying off a second mortgage or college education – or maybe paying for a college education for their kid.  It just feels like you’d be saving money by saving on all the interest you see racking up on all of those loans.  Wrong.

So…tax-advantaged accounts like IRA’s and 401(k)’s give you power of “pretax contributions”.  What’s that mean?  It means your contribution to your retirement account comes out first before any of your federal or state taxes are deducted.  It also means your money can compound without taxes feasting on your growth potential.  Makes sense, right? Over time, your earnings can, and will, generate their own earnings.  Folks…this means “mo money, mo money”.  I LOVE the word “compound” – it means your money is self-sufficient and means your money is MAKING YOU MONEY.

I know I’m breaking this down pretty simple – and I hope you’re not offended.  But let me be more clear…LEAVE YOUR MONEY ALONE.  There!  I feel so much better now.

Mistake 2.  Not Changing Your Lifestyle

This ones a no brainer…and I’m good at this one.  One thing I do well is live cheap.  Simply put – you should not keep on living the life of a king/queen like when you’re getting that paycheck.  Your retirement money might have to last you until you’re like…100 years old or something.  Really.  What if you live that long?  Have you thought about it?  Will your money last that long?  Why take the chance.  Adjust your expenses and CUT BACK YOUR SPENDING.


That retirement money looks large, doesn’t it.  Just keep in mind the money has to last you a long-ass time.  The temptation might feel irresistible – but you can beat it!  Still go on that dream vacation, just don’t do it every year.  Here’s a plan…don’t spend more per year than you earn in interest.  Eating into your principal is the kiss of death!

How can you cut back, you ask?

  • DSC00579

    That’s our Granddaughter

    What about those kids…are you still supporting them?  Are they 20, 30 or 40?  If they live with you, they can help with the bills.  Period.  Case in point:  My granddaughter wants to move in with me and Grandpa.  Ok, cool.  Get a job and pay rent, help with groceries and put gas in your own car and pay for your own insurance…OR…get back in college and we’ll negotiate the bills.  Oh!, she said.  🙂

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    And…NO second level – so, NO STEPS!

    Is your house paid for?  Good.  Think about selling it.  Downsize and buy a smaller house and hopefully you can just pay cash for it from the sale of your bigger home – then use the rest of your money towards retirement and living expenses.  Use all that equity you stored up to your advantage!  And with a smaller house typically comes smaller taxes, insurance, utilities and maintenance – and…you can sell (or donate) all of that furniture you don’t need anymore.  🙂

  • ten-1173244_1920

    Those 10%’s add up

    Take advantage of senior discounts.  Ok.  I’ll admit I was irritated when I got my AARP card registration, but you know what?  You can get a TON of discounts on items you use and on things you want to do.  So why not take advantage of coupons, restaurant discounts and savings on insurances?  And I love taking advantage of “tax free” days at certain retailers.

  • hospital-costs-459228_1920

    Be prepared for the unexpected

    Take a look at your health coverage.  At our age we can’t go without it – that’s for sure.  But, we can take a look at our situation and research cost saving options – especially for our high-cost prescriptions.  For example, my hubby is on a crap load of medications.  He gets one of his prescriptions for free from the manufacturer.  That saves us a boatload!!

  • muscle-car-1130639_1920

    Ditch the New School – Keep the Old School

    I know you have at least two cars (maybe three).  Do you need both of them?  If so, then by all means, keep them.  If not – sell one of them.  Us old folks keep our cars in great shape.  Take advantage of that and sell one of your cars for a nice buck.

  • wa_change_life_125x125

    Build a business – Build your Nest Egg

    Look for ways to make additional income.  You’re here on my site, so you know my passion is to help individuals earn and keep more of their money.  If you’re retired (or almost retired) and want to earn more money and beef up your retirement income, make sure you read my review on Wealthy Affiliate.  Think seriously about doing a business from your home.  And don’t forget – you get to claim a portion of your home and business equipment on your taxes.  Boom.  Win. Win.


Tighten up your spending

I’m not going to preach here.  Just keep your spending in prospective.  Remember when you were first starting out – newly married, first home, kids…you lived frugal.  Remember in the 1969 milk used to cost about $1.10 and gas was .35 and a postage stamp was .06!  Of course the costs differences are all relative, but still!  And remember…don’t forget about your rising health care costs – you aren’t getting any younger, ya know.

Mistake 3.  Applying Early for Social Security

Just because you’re retirement age and eligible for social security, doesn’t mean you should apply. You’re 62.  It’s money owed to you, right?  So what’s the rush.  Remember…we are Baby Boomers!  Patience is hard-wired in our DNA.  Use that patience now – if you can wait, wait!  If you apply for benefits at 62, it might result in a huge reduction of about 30% of your Social Security earnings.  You get the largest benefit is you wait until you’re 70.  That’s what my tax guy said.  He threatened me to not touch it.  (Remember, he was the one who got me out of my tax mess from withdrawing my IRA).  I wanted to use my actual Social Security rate table as an example, but I can’t find it (I’m still working on being better organized) – but I’m pretty excited by what I saw, and I can’t wait (yes I can) to get to 70!

I know…what if they money’s not there when we need it?  I’m not worried about that quite yet…I have enough to worry about!  This has been a sore spot for years and will probably continue to a heavily debated issue.  According to government propaganda they would have us believe…”there is enough money saved to pay benefits at the currently scheduled amounts until 2035-ish”.  Ok.  I’ll go with it.

If you want to see where you stack up…click here to check out the Retirement Estimator for Social Security.  Pretty Cool.

Mistake 4.  Forgetting to Move Your Investments

This one is simple.  Move your money out of aggressive and moderate risk investments and into a more conservation one.  This means it’s time to sit down with your financial advisor and put the pencil to paper and make some solid, good decisions.  This one speaks for it’s self.  When you’re younger you can take higher risks because you have more time to recover.  When you’re older – you want to hang on to as much of your money as possible.  It would be catastrophic to try and recoup a nasty loss if the stock market or recession tries to hit your wallet.  High risk gambling is for the young!  I’m not calling you old…I’m just sayin.


Mistake 5.  Exposing Yourself to Fraud or Scams

Us Baby Boomers…we are at a HUGE risk for scam artists.  Everyone gets taken once in a while…but we’re particularly more vulnerable because of the way we were raised.  We were raised to be polite and trusting.  Sometimes I hate that about myself.  Sometimes I just want to be scandalous!  But, alas…that will never be – because I wouldn’t be able to sleep at night.  But the thieves can.


We were raised on a handshake and a smile – and it meant something.  We believe in honesty in business.  I will admit I’ve learned to become more skeptical over the years…especially working in retail.  I absolutely can NOT believe how many people steal…and some with their children in tow!  That’s harsh.

Financial scams are huge right now with no sight of slowing down.  Just a word of advice…if you get an email from an Egyptian King – DO NOT give them any money!  They are KINGS, for Pete’s Sake – they already have enough money so they don’t need yours.  🙂  Seriously though…if you do get scammed, don’t be embarrassed.  These thieves are good at what they do.  Educate yourself.

Mistake 6.  Ignoring Mistakes 1 through 5


Ignorance IS NOT Bliss

I know.  How cliché!  But I’m only adding this 6th mistake to make a point.  Don’t be like me and put on blinders.  I didn’t want to look to the future, I guess, because I would have to admit I was getting old…FAST.  I didn’t want to face it, and it was the wrong thing to do.  Mistake 6 will not apply to most you.  You have it figured out.  I’m talking to all the other “me’s” out these with their head in the sand – we didn’t have a plan.  Pull you head out!  Get busy, and get your life back on track.  I’ve started reading (a lot) about what’s going on out there.  We’re not alone in our search for comfort in our retirement years.


I have an overwhelming need to talk about things.  I must TOE THE LINE.  I must do what is expected.  I must abide by my hard-wired DNA to share what I know.  I’m no expert.  You know that.  But what I know, I share.  What I don’t know…I’ll find out.  That’s a promise from me…to you.

My old excuse?  I didn’t have parents who told me about the importance of saving for my future.  My new excuse?  I don’t have one – I’m taking charge and fixing my dilemma.


This is Me!

If you’ve been a victim of anything…it happens, educate yourself.  If you’re skeptical, good.  Have you made bad financial decisions?  We all have.  Together let’s make ourselves more aware.  Together let’s share our knowledge, and together let’s get older and wiser with grace…and with more of our money in our pockets.

Until next time…

Sheila Signature




Disclaimer:  I’m no money guru or financier by any means.  These posts are simply my opinion, from my perspective, learned by the life I have led.  If you have specific questions or concerns regarding your retirement situation, please contact an experienced tax consultant or financial advisor.  They are the experts for a reason.  Thank you.


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