Pure’s Financial Advisor, Chris Jackson, CFP®, MBA, highlights key retirement red flags that often catch people off guard, and explores what you can do about each one before it’s too late.
Transcript
You’ve done everything right — maxed out your 401(k), lived below your means, and stayed the course through market volatility. But here’s the uncomfortable truth: even the most disciplined savers can run into serious trouble if a few key retirement red flags go unaddressed.
Today, I’m walking you through five retirement red flags that often catch people off guard — and what you can do about each one before it’s too late.
Red flag number one is “no clear withdrawal strategy.” Saving money is only half the equation. Many retirees walk into retirement without a plan for how and when to draw down from their accounts. Pulling from the wrong accounts at the wrong time can trigger unnecessary taxes, push you into a higher bracket, or cause you to miss out on Roth conversion opportunities. A tax-efficient withdrawal strategy can make a significant difference in how long your money lasts.
Red flag number two is “underestimating healthcare costs.” A 65-year-old couple retiring today can expect to spend an estimated $345,000 on healthcare throughout retirement — and that figure doesn’t include long-term care.1 Medicare covers a lot, but it doesn’t cover everything. Dental, vision, hearing, and supplemental coverage all add up. If your retirement plan doesn’t account for rising healthcare costs, that gap could quietly erode your savings.
Red flag number three is “ignoring sequence of returns risk.” Timing matters more in retirement than most people expect. If the market drops significantly in your first few years of retirement while you’re actively withdrawing, it can permanently reduce how long your portfolio lasts — even if the market fully recovers later. This is called sequence of returns risk, and it’s one of the most overlooked threats in retirement planning. Having a strategy to limit withdrawals during down markets can help protect your long-term outlook.
Red flag number four is “claiming social security too early.” More than two-thirds of the 3.25 million Americans newly claiming Social Security benefits in 2024 filed before the age of 66. That means they filed before their full retirement age (FRA), locking in permanently reduced checks by as much as 30%.2 For married couples, the decision about when each spouse claims can have a significant impact on lifetime household income. Before you file, it’s worth running the numbers.
Red flag number five is “no plan for inflation.” A retirement that looks comfortable at 65 may feel very different by 80. Even moderate inflation adds up: At just 3% per year, $1 million loses roughly half its buying power in 24 years.3 Many retirees default to conservative, fixed-income portfolios that don’t keep pace with rising costs. Making sure a portion of your portfolio is positioned for growth — not just preservation — is an important part of a sustainable retirement income strategy.
These red flags don’t mean retirement is out of reach — they mean the planning you do now matters more than ever. Download our Retirement Readiness Guide. Or, if you want to go deeper and you’re ready to review your personal financial plan, schedule your free financial assessment with Pure Financial today.
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IMPORTANT DISCLOSURES:
- Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor.
- Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations.
- Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
- Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
- All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
- Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
CFP® – The CERTIFIED FINANCIAL PLANNER® certification is by the CFP Board of Standards, Inc. To attain the right to use the CFP® mark, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. 30 hours of continuing education is required every 2 years to maintain the certification.
MBA – The Master of Business Administration (MBA) is a postgraduate degree that is awarded to students who have mastered the study of business. Most MBA programs include a “core” curriculum of subjects, such as accounting, economics, marketing, and operations, as well as elective courses that allow participants to follow their own personal or professional interests.
