10 Worst Things People Do at the Beginning of Retirement

RETIREMENT - RETIRED LIFE
You don’t want to start your retirement on the wrong foot by making mistakes early on.
Updated May 8, 2024
Fact checked
annoyed mature woman looks at computer in confusion

We receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

Most people view retirement as the start of the next chapter of their lives, and they have big plans for how they will live it.

A big issue to consider is what happens when you actually wake up on that first day of retirement and don’t have to go to work. Especially when you want to retire early, you could end up having a rocky start instead of a relaxing retirement if you aren’t prepared for that day,

So as you put your plans into action, try to avoid the following things to get off to a good start.

Eliminate your late tax debt

Each year, the IRS forgives millions in unpaid taxes. If you have more than $10,000 in tax debt, or have 3+ years of unfiled taxes, you could get forgiveness too. You might be eligible to lower the amount you owe, or eliminate your tax debt completely.

Easy Tax Relief could help you lower or get out of your tax debt for good. They’re well respected in the industry and have been recognized for their ethical standards when dealing with tax debt. While most tax companies just put you on a payment plan and file your taxes for you, Easy Tax Relief talks to the IRS directly. They can help you pay off your tax debt faster while potentially reducing what you owe.

Important: Not everyone will qualify. To take advantage of this special program you must owe more than $10,000 in past-due taxes.

Fill out this form to get started

Carrying debt into retirement

SUPERMAO/Adobe elderly woman stressed about credit cards

One of the biggest issues you may be carrying with you into retirement is your debt load. Remember that your income is limited when you retire, but your debts don’t disappear when your paychecks stop.

If you can, make sure you pay off all your debt, like credit cards and student loans, before you retire. For other debt, such as car payments or your mortgage, add it to your monthly budget of fixed expenses.

Skipping a retirement budget

Astarot/Adobe man sitting in his home office with bills in hands and paying it online over laptop

Don’t go into your retirement without an idea of what you expect to need on a regular basis to continue to pay your bills. You’ll want to include everyday items like your home, utilities, and food as well as special purchases like a yearly trip if you want to travel.

Try to create this budget before you notify your employer that you’re retiring, not after. You don’t want to be surprised by how much you plan to spend compared with how much you saved for retirement.

Not having a financial plan

insta_photos/Adobe senior couple sitting on table reviewing documents

A financial plan isn’t just about your monthly budget. You’ll also want to take into account your overall investment portfolio to get a good idea of everything you have going forward.

Your financial plan should include your investments like retirement funds and real estate as well as your expenditures each month.

And make sure you also consider your Social Security and Medicare depending on when you expect to start collecting them.

Earn $200 cash rewards bonus with this incredible card

There's a credit card that's making waves with its amazing bonus and benefits. The Wells Fargo Active Cash® Card(Rates and fees) has no annual fee and you can earn $200 after spending $500 in purchases in the first 3 months.

The Active Cash Card puts cash back into your wallet. Cardholders can earn unlimited 2% cash rewards on purchases — easy! That's one of the best cash rewards options available.

This card also offers an intro APR of 0% for 15 months from account opening on purchases and qualifying balance transfers (then 20.24%, 25.24%, or 29.99% Variable). Which is great for someone who wants a break from high interest rates, while still earning rewards.

The best part? There's no annual fee.

Click here to apply now.

Spending too much money too early

Studio Romantic/Adobe senior woman receiving bankruptcy notification

Retirement can be very exciting and you might be ready to spend some of your savings so you can start to enjoy life. Perhaps you’re going to buy that car you always wanted or go on an exotic vacation to a place you’ve dreamed of visiting.

But it can be possible to have too much of a good thing. You don’t want to go overboard with your spending, or you may be in for an unpleasant surprise when your money runs out. It's important to stop throwing your money away before it's too late. 

Not staying active

Budimir Jevtic/Adobe senior man napping at home

Have you thought about what you’re going to do once you’re retired? It may sound nice to sit around and catch up on television or read a few books you’ve let pile up. But then what?

It’s important to stay active in your community instead of locking yourself away at home when you’re retired. Make sure you have a plan in place for what you want to do with your free time and find ways to get involved with local activities.

Quitting your job with loose ends

Prostock-studio/Adobe senior manager massaging nose while using laptop

Retiring on short notice may not be a good plan. You may want to sit down with your human resources department well before you turn in your resignation letter.

You may have outstanding company stock that you might lose if you retire early. Ask your benefits manager about other issues like health benefits or seniority benefits that require you to work for a certain amount of time before you can take advantage of them.

Forgetting your physical health

rawpixel.com/Adobe athletic man wiping sweat from forehead

It can be easy to fall back into laziness and do nothing when you retire, but it’s important to stay in shape as you get older.

Think about adding regular physical activity to your list of daily activities, even if it’s just walking with neighbors. You may want to include a gym membership to your estimated budget. You may also qualify for senior discounts at a gym or the YMCA.

Taking Social Security too early

comzeal/Adobe senior couple serious worried with calculating bills

You’ve contributed to Social Security for your entire working life, but it’s important to make the right decisions to maximize your benefits.

Taking your Social Security benefits too early will mean you receive less each month throughout your retirement years. Waiting until you are at full retirement age may be the best bet. If you can wait until you’re age 70, you will get the maximum monthly benefit.

On the other hand, you may want to start collecting as soon as you’re eligible because you can afford to receive a smaller payment each month. Or you need the money now.

Pro tip: Find ways to supplement your Social Security when you retire if you decide to take your funds early and need additional cash to cover your expenses.

Skipping a portfolio rebalance

rocketclips/Adobe serious mature woman searching the internet

You may look at your portfolio and think you’re all set for retirement, but simply letting your investments sit in their current state may be a bad idea.

Instead, sit down with a financial advisor and set up a schedule to rebalance your portfolio, based on current market trends. Your retirement portfolio should include diversified investments.

As you move into retirement, you may want to move your assets into less risky investments. You’ll also want to know how much money you may be earning from your investments until you take the required minimum distributions.

Take advantage of historically high rates to grow your wealth

Are your savings just sitting around, not earning much interest? It's time to make a change and put your money to work for you! With CloudBank 24/7, you can earn more interest on your money today ... while keeping your cash OUT of the stock market.

Here’s their secret: CloudBank 24/7 amplifies your money by doing what many banks refuse to do … paying you a rare 5.24% APY (annual percentage yield)12 on your cash.

When you deposit your money into this high-yield savings account, you can supercharge your emergency fund, short-term savings, return on cash, and more with interest income generated from their high 5.24% APY payout.

The best part? There are no fees, you can withdraw your money at any time, and opening an account takes as little as 3 minutes. CloudBank 24/7 is FDIC-insured through Third Coast Bank SSB and cybersecurity is a top priority, ensuring your data is kept safe.

Limited Time Bonus: Earn up to $2,000 when you refer friends and family to Raisin. Visit site to learn more.

Click here to open a CloudBank 24/7 online savings account

Withdrawing from retirement accounts early

Marius Venter/peopleimages.com/Adobe elderly woman sitting in front of her laptop looking stressed

You may have a retirement account like an individual retirement account (IRA) that will help fund your retirement life. But IRAs have government restrictions that could put a damper on your retirement if you start withdrawing money too early.

Before you begin your retirement, you should understand the limits and penalties associated with your retirement funds and factor those issues in when you’re creating a budget. You don’t want to reduce the amount of money in your retirement savings because of things like penalty fees or taxes.

Bottom line

peopleimages.com/Adobe couple discussing about documents at home

Retirement can be a great thing, but it’s important to consider all the issues involved with planning for retirement.

Make sure you have a plan in place before you offer your resignation letter so you can start off your post-work life with a solid financial foundation for your later years.

Lucrative, Flat-Rate Cash Rewards

5.0

Wells Fargo Active Cash® Card

Current Offer

$200 cash rewards bonus after spending $500 in purchases in the first 3 months

Annual Fee

$0

Rewards Rate

Earn 2% cash rewards on purchases

Benefits and Drawbacks
Card Details

Author Details

Jenny Cohen Jenny Cohen is a freelance writer who has covered a bit of everything, from finance to sports to her favorite TV shows. Her work has been featured in The Wall Street Journal, USA Today, and FoxSports.com.

Want to learn how to make an extra $200?

Get proven ways to earn extra cash from your phone, computer, & more with Extra.

You will receive emails from FinanceBuzz.com. Unsubscribe at any time. Privacy Policy

  • Vetted side hustles
  • Exclusive offers to save money daily
  • Expert tips to help manage and escape debt