When Good Saving Habits Turn Into Retirement Planning Mistakes
By Josh Wolberg, CFP®, RICP®, MBA
After over nearly two decades in this work, I’ve noticed that the people who thrive at saving for retirement often struggle the most when it comes to actually living off what they’ve built. That’s not a character flaw. Saving and spending draw on genuinely different skills, and the habits that made you a disciplined accumulator don’t automatically translate into a workable income plan.
Here are five places where those habits tend to work against you, and what to think about instead.
1. Claiming Social Security Based on a Simple Rule
“Claim early” or “Wait as long as possible” sound like advice, but neither is a strategy. Social Security timing depends on your health, your spouse’s age and benefit, your other income sources, and how taxes interact with your benefits.
For some people, delaying past 70 makes little sense. For others, an early claim permanently reduces a survivor benefit that a spouse can collect for decades.
As one of the few financial decisions that can’t be undone, it deserves more than a rule of thumb.
2. Letting Your Paycheck Handle Taxes When it No Longer Can
When you were working, taxes came out automatically. The order in which money left your paycheck wasn’t something you had to think about.
Things change in retirement. You’re drawing from accounts that are taxed very differently from one another: traditional IRAs and 401(k)s are taxed as ordinary income, Roth accounts generally aren’t taxed at all, and brokerage accounts sit somewhere in between.
The order in which you withdraw from those accounts can influence your tax bill significantly, year after year. Many retirees default to pulling from the same account every year without realizing a more thoughtful sequence might mean they keep much more.
As we like to say at our firm: pay your taxes, but don’t leave a tip.
3. Investing Like You’re Still Accumulating
A growth-focused portfolio made sense when you had 20 or 30 years to ride out downturns.
Retirement shifts the math. Now you’re withdrawing regularly, which means a steep market decline in the first few years of retirement can do lasting damage to a portfolio that would otherwise recover just fine.
One way to think about it: structure your portfolio in three layers.
Cash covers what you’ll spend in the next 6 to 12 months, so you’re never forced to sell stocks at a bad time. A bond buffer covers roughly 10 to 15 years of annual spending, giving markets time to recover. Stocks carry the money you genuinely won’t need for a long time, with the biggest chance of keeping pace with inflation.
This is a matter of matching your investment structure to what you actually need the money to do. The smartest portfolio is one you can stay with through volatile stretches, not the one that looked good on paper five years ago.
4. Never Making the Mental Switch From Saving to Spending
This one might be the hardest.
Decades of disciplined saving builds a real identity around not spending. Then retirement arrives and the whole point is to spend. Many people can’t do it. They watch the balance decline and feel anxious, even when the numbers say they’re fine.
I’ve sat across from clients with $3 million who hesitated to book a family trip because they weren’t sure they could afford it. The problem wasn’t the money, but that they didn’t feel they had permission to use it.
Part of what we do is help people move from anxiety about running out to confidence that their plan holds. Not because we’re cheerleaders, but because the numbers actually support it.
5. Paying More for Advice Than Your Portfolio Should Bear
Most advisory fees are structured as a flat percentage of assets, usually around 1% per year.
That math can work reasonably at lower asset levels. At $3 million or $4 million, it starts to feel different. A client with $4 million paying 1% is paying $40,000 a year, every year, regardless of whether their plan required that much work.
Your costs shouldn’t double just because your portfolio did. It’s a good idea to understand what you’re paying and what you’re getting for it. Some advisors charge hourly; some charge a flat retainer; and some, like us, use a tiered structure where the percentage declines as assets grow.
None of those models is right for everyone, so it’s worth your time to know the difference.
Step Into the Shift
These aren’t mistakes in the traditional sense; they’re good habits applied to a situation they weren’t designed for.
The people I work with are careful, thoughtful savers who built real wealth by making smart decisions over a long time. The transition to income is just a different problem, and it responds well to a clear plan.
If you’ve been running the numbers on your own and still have questions, a 15-minute intro call requires no prep and no commitment. We’re happy to talk through where you are, whether that leads to working together or not.
To schedule a meeting or a call, get in touch by calling (763) 231-7581 or emailing info@greatriverfinancial.com.
Frequently Asked Questions
What is the most common retirement planning mistake people make?
The most common mistake is continuing to save and invest the same way in retirement as during your working years. Building wealth and drawing it down require different strategies. Key areas where this shows up include withdrawal order (which account you pull from first), portfolio structure (growth vs. income balance), and Social Security timing. Getting these wrong early in retirement can have long-lasting consequences that are difficult to reverse.
When should I claim Social Security to avoid mistakes?
There is no single “right” age to claim Social Security. The ideal time depends on your health and life expectancy, whether you’re married and the age gap between spouses, your other retirement income sources, and how Social Security benefits interact with your tax situation. Claiming at 62 reduces your monthly benefit permanently; delaying past full retirement age increases it up to age 70. For married couples, the survivor benefit strategy is often as important as the claiming age itself.
How do I avoid paying too much in taxes on retirement withdrawals?
Mitigating taxes on retirement withdrawals starts with understanding that each account type is taxed differently: traditional IRAs and 401(k)s are taxed as ordinary income, Roth accounts are generally tax-free, and brokerage accounts may be subject to capital gains rates.
A coordinated withdrawal sequence can help manage your annual tax bracket, reduce required minimum distributions (RMDs) over time, and preserve more wealth for you or your heirs. At Great River Financial, tax-efficient withdrawal planning is built into every retirement income plan we develop, alongside investment management and Social Security strategy.
About Josh
Josh Wolberg, CFP®, RICP®, MBA, is president and lead financial planner at Great River Financial, located in Plymouth, Minnesota. He began working as an advisor in 2007 to help pre-retirees turn what they’ve saved into a tax-efficient income they can spend with confidence. Josh’s undergrad in computer science still shapes how he works; he explains retirement, investments, and taxes through analogies and visuals instead of jargon.
