For decades, many people dream of retirement as the reward for a lifetime of hard work—a time of travel, hobbies, and relaxation. But the reality is often more complicated. Even with the best intentions, certain financial moves can derail those dreams, leaving retirees stressed and financially insecure.

From underestimating expenses to making hasty investment decisions, these missteps can turn a comfortable retirement plan into a constant struggle to make ends meet. Let’s look at the seven financial moves that have made retirement harder than expected for so many and how to steer clear of them yourself.

Financial Moves That Could Hurt Your Retirement

1. Claiming Social Security Too Early

It’s tempting to tap into Social Security as soon as you hit eligibility at age 62, especially if you’re eager to leave the workforce. But claiming too early permanently reduces your monthly benefits, sometimes by as much as 30% compared to waiting until full retirement age.

This decision often stems from fear of missing out or worries about Social Security’s future stability. Unfortunately, the reduced monthly payments can make it challenging to cover rising living costs, particularly healthcare and housing expenses. Waiting even a few years can significantly boost your monthly check, providing a crucial buffer against inflation and unexpected bills.

2. Underestimating Healthcare Costs

Many retirees are shocked to discover that Medicare doesn’t cover everything and that healthcare can be a huge financial burden. Prescription drugs, dental work, vision care, and long-term care costs often catch retirees off guard, draining savings faster than expected.

Some retirees skip supplemental insurance (Medigap or Medicare Advantage) to save on monthly premiums, but this can backfire if major medical bills arise. It’s essential to plan for out-of-pocket costs and consider setting aside a health savings account (HSA) or other funds dedicated to medical expenses.

3. Not Accounting for Inflation

A dollar today doesn’t buy what it did twenty years ago, and it’ll buy even less twenty years from now. Many retirees assume their current expenses will stay roughly the same, forgetting that inflation quietly eats away at purchasing power over time.

This oversight can turn a seemingly sufficient retirement budget into a source of stress as everyday costs for groceries, utilities, and transportation creep upward. A solid financial plan should include investments that at least keep pace with inflation, such as stocks or inflation-protected securities, to preserve long-term spending power.

4. Carrying Debt Into Retirement

High-interest credit card balances, mortgages, and even car loans can drain a retiree’s fixed income quickly. Many retirees discover too late that servicing these debts leaves little room for enjoying their golden years or covering unexpected expenses.

Paying off high-interest debt before leaving the workforce can free up funds for travel, hobbies, or emergencies. If paying everything off isn’t possible, consider consolidating debt into lower-interest loans or refinancing to ease the monthly burden. Remember, every dollar spent on interest is a dollar that could have supported your retirement lifestyle.

5. Making Risky Investments Too Late in Life

Some retirees, worried about outliving their savings, jump into risky investments—like speculative stocks or volatile cryptocurrencies—hoping for quick gains. But sudden market downturns can wipe out years of savings, leaving little time to recover.

Diversification is crucial in retirement. A balanced portfolio that matches your risk tolerance can provide growth potential without exposing you to devastating losses. Consulting with a reputable financial advisor can help you build a portfolio that keeps your retirement on track.

6. Underestimating Longevity

Medical advances and healthier lifestyles mean people are living longer than ever. While this is a positive trend, it also means that savings need to last longer. Many retirees plan for 15 or 20 years in retirement, only to discover they need funds for 25 or even 30 years.

Running out of money is one of the biggest fears retirees face. Strategies like delaying Social Security, purchasing an annuity, or planning for part-time work can help bridge the gap and ensure you don’t outlive your nest egg. Remember, it’s better to plan for a longer life than to be caught short when you need funds the most.

7. Failing to Create a Realistic Budget

A surprising number of retirees never sit down to calculate their monthly expenses. Without a budget, it’s easy to overspend in the early years of retirement, especially on travel, home improvements, or gifts for family. This can leave you financially vulnerable in later years when medical bills or assisted living costs hit hard.

Creating a budget that reflects both wants and needs and adjusting it as circumstances change can help you stay on track. Tools like retirement calculators, budgeting apps, and working with a financial planner can make this process easier and more accurate.

Avoiding These Mistakes Means a More Enjoyable Retirement

Retirement should be about living life on your own terms, but that’s hard to do if your finances aren’t in order. These seven financial moves have derailed many retirement dreams, but they don’t have to derail yours. By learning from the mistakes of others, you can build a more resilient financial plan that ensures your retirement is truly golden.

Have you seen any of these financial missteps impact your own retirement, or do you know someone who’s struggling with them?

Read More:

Retired and Broke: What They Wish They’d Done Differently at 40

7 Outrageous Lies You Still Believe About Early Retirement

Read the full article here