10 Worst Things People Do at the Beginning of Retirement

You don’t want to start your retirement on the wrong foot by making mistakes early on.
Updated May 8, 2024
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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.

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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

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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

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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.

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Spending too much money too early

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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

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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

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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.

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Withdrawing from retirement accounts early

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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

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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.

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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.

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