Retirement Planning Insight
What Is the Biggest Mistake Most People Make Regarding Retirement?
The single biggest retirement mistake is failing to build a written income distribution plan before leaving the workforce. Without one, even substantial savings can create anxiety, tax exposure, and the risk of outliving your money.
The Core Answer
No Written Income Plan: The Mistake That Costs Retirees the Most
Most people spend decades focused on accumulation — saving, investing, and building a balance. Yet the transition from saving to spending requires an entirely different strategy. According to research by the Employee Benefit Research Institute, more than half of American workers have never calculated how much income they will need in retirement. That gap between savings and a functional income plan is where things go wrong.
A written income distribution plan coordinates your Social Security timing, required minimum distributions (RMDs), withdrawal sequencing across taxable and tax-deferred accounts, and projected expenses. Without that coordination, you may pay significantly more in taxes than necessary, draw down accounts in the wrong order, or face a retirement income shortfall even with a seven-figure portfolio.
This is the planning gap that a CFP professional — particularly one with a CRPC designation specializing in retirement transitions — is specifically trained to close. The good news: it is entirely avoidable with the right guidance, ideally starting three to five years before your target retirement date.
Key Takeaways
- 1 The most common and costly retirement mistake is entering retirement without a written income distribution plan that coordinates all income sources.
- 2 Tax planning in retirement is often overlooked — Connecticut taxes retirement income, making tax-sensitive withdrawal strategies especially important for CT residents.
- 3 Underestimating longevity and healthcare costs ranks among retirees' most common regrets, according to surveys of Americans in retirement.
- 4 A comprehensive plan integrates investments, tax strategy, Social Security timing, and estate considerations into a single coordinated approach.
- 5 The earlier you address these gaps — ideally three to five years before retirement — the more options you have to correct course.
By the Numbers
Retirement Planning: Where the Gaps Are Largest
Data from the Employee Benefit Research Institute and other sources highlights how widespread retirement planning gaps remain, even among those who have saved diligently.
50%+
of workers have never calculated their retirement income need (EBRI, 2023)
40%
of retirees cite Social Security timing as one of their biggest regrets (Nationwide, 2022)
20+
years is the typical retirement duration for someone retiring at 65, per Social Security actuarial data
$315K
estimated lifetime healthcare cost for a 65-year-old couple in retirement (Fidelity, 2023 estimate)
Common Errors
The Top Retirement Mistakes — and How to Avoid Them
The absence of an income plan is the root cause, but it manifests in several specific and interrelated errors that compound over time.
No Coordinated Income Plan
Treating Social Security, RMDs, pension income, and investment withdrawals as separate decisions rather than a coordinated system is the defining mistake. The order in which you draw from accounts has significant tax and longevity implications. A plan accounts for all sources together.
Ignoring the Tax Picture in Retirement
Many pre-retirees assume taxes drop sharply once they stop working. For those with significant pre-tax savings, RMDs can push taxable income higher than expected. Connecticut taxes a portion of retirement income depending on income level, adding a state layer that requires specific planning. Without tax-sensitive withdrawal strategies, retirees may pay more than necessary over time.
Claiming Social Security Too Early
Claiming Social Security before full retirement age locks in a permanently reduced benefit. For someone retiring at 62 rather than 70, the difference in lifetime benefit can be substantial, depending on longevity. Social Security timing should be modeled as part of a broader income plan, not decided in isolation.
Underestimating Longevity and Healthcare
A 65-year-old couple today has a meaningful probability that at least one spouse lives into their 90s, according to Social Security actuarial tables. Healthcare costs tend to increase with age. Portfolios designed for a 20-year retirement may fall short in a 30-year one. Plans should model multiple longevity scenarios and account for healthcare as a budget line item.
A Portfolio Not Aligned with Income Needs
Accumulation and distribution require different portfolio structures. A portfolio optimized for long-term growth may expose a retiree to sequence-of-returns risk — meaning early market downturns can disproportionately harm portfolio longevity when withdrawals are ongoing. Portfolio design should shift to reflect actual income timing needs, not a generic risk tolerance score.
Waiting Too Long to Plan
The years between ages 55 and 65 are often the highest-leverage planning window. Roth conversion opportunities, pre-retirement tax positioning, and Social Security analysis all benefit from a multi-year runway. Waiting until retirement to address these questions reduces the options available and often results in a suboptimal outcome.
A Connecticut Perspective
Why Retirement Planning in Connecticut Requires Extra Attention
Connecticut has a specific retirement income tax structure that catches many pre-retirees off guard. The state taxes Social Security benefits, pension income, and IRA distributions for residents above certain income thresholds. For individuals and households with $1 million or more in retirement savings, this can translate into a meaningful ongoing tax burden that a properly coordinated withdrawal strategy may help to manage.
At Skinner Wealth Strategies, based in Milford, Connecticut, our planning process is built around this reality. Brian Skinner, CFP, CRPC, works directly with pre-retirees and retirees across Fairfield County and the broader Connecticut region to build income plans that account for both federal and state tax layers, Social Security timing, RMD planning, and portfolio structure — all in a single coordinated strategy. Individual results vary, and no strategy eliminates taxes entirely.
Brian also teaches retirement planning classes across Connecticut communities, which means the guidance offered here is grounded in the specific questions and concerns Connecticut residents raise most often.
How We Help Close the Gap
Discovery Conversation
We begin by understanding where you are today — your accounts, income sources, goals, and timeline — before offering any recommendations.
Comprehensive Assessment
We assess your retirement readiness, identify planning gaps, and model how your income, taxes, and portfolio interact across different scenarios.
A Written Income Plan
You receive a clear, written income distribution plan — not a generic template — that coordinates all your sources and is designed around your specific situation.
Ongoing Support
Retirement is not a one-time event. We provide continuing guidance as tax law, markets, and your personal circumstances evolve over time.
Common Questions
Frequently Asked Questions About Retirement Mistakes
Answers to the questions people ask most often when thinking through their retirement planning gaps.
What are the top 5 retirement mistakes?
The five most common retirement mistakes are: (1) entering retirement without a written income plan; (2) claiming Social Security too early without modeling the long-term impact; (3) underestimating taxes on retirement income, including required minimum distributions; (4) underestimating healthcare and longevity costs; and (5) keeping a portfolio structured for accumulation rather than income distribution. Each of these compounds the others, which is why a coordinated approach matters.
What is the number one reported regret of retirees?
Survey data from sources including Nationwide and various academic studies consistently show that Social Security timing ranks among the top regrets of retirees — specifically, claiming benefits too early. Many retirees also report wishing they had planned more carefully for healthcare expenses and started the retirement planning conversation with a professional advisor earlier in their 50s.
What is the number one reported mistake related to planning for retirement?
The most frequently cited planning mistake is the absence of a formal, written plan — particularly one that addresses income distribution rather than just savings accumulation. Most pre-retirees have a savings target but no clear framework for how that savings will be converted into sustainable income that accounts for taxes, inflation, and the sequence of withdrawals across different account types.
What is the $1,000 a month rule for retirees?
The $1,000 per month rule is a rough planning shorthand suggesting that for every $1,000 of monthly retirement income you want, you may need approximately $240,000 in savings, based on a 5% annual withdrawal rate. This rule is a starting point for conversation, not a plan. Actual income needs, tax situations, Social Security benefits, and life expectancy vary significantly by individual. A personalized income plan should replace rules of thumb as retirement approaches.
Which four factors represent the biggest retirement regrets?
Research and surveys point to four recurring themes in retirement regrets: (1) not saving or investing earlier in a career; (2) claiming Social Security before optimizing timing; (3) underplanning for healthcare and long-term care costs; and (4) not working with a qualified financial planner during the critical pre-retirement years. Each of these is addressable with advance planning, and all four are areas where an experienced CFP professional can provide meaningful guidance.
How much money do you need to retire in Connecticut?
Connecticut's cost of living, tax structure, and healthcare costs all factor into retirement income needs. While no universal figure applies, many financial planning frameworks suggest targeting 70 to 90 percent of pre-retirement income annually, adjusted for your specific spending patterns. Connecticut residents should also account for the state's partial taxation of retirement income — including Social Security benefits above certain thresholds — when modeling their income needs. A personalized income analysis provides a far more reliable figure than any general estimate.
About the Author
Guidance Grounded in Specialized Retirement Expertise
Brian Skinner, CFP, CRPC
Founder, Skinner Wealth Strategies | Milford, CT
Brian Skinner holds the Certified Financial Planner (CFP) and Chartered Retirement Planning Counselor (CRPC) designations, with a specialized focus on helping individuals and families aged 50 and older navigate the transition from saving to sustainable retirement income. He teaches retirement planning classes across Connecticut communities and serves clients in Milford, Fairfield, and Fairfield County.
Skinner Wealth Strategies operates as a fiduciary — meaning Brian is required to act in the client's best interest at all times. This structure is designed to reduce certain compensation-related conflicts, though as with any advisory relationship, potential conflicts may still exist and are disclosed in the firm's Form ADV.
Specializations
- Retirement Income Planning
- Tax-Sensitive Distribution
- Social Security Timing
- RMD Strategy
- Investment Management
- Estate Coordination
Take the Next Step
Avoid the Retirement Mistakes That Cost People the Most
A written income plan — one that coordinates your Social Security, taxes, RMDs, and portfolio in a single cohesive strategy — is the most important step you can take before retirement. Skinner Wealth Strategies works with pre-retirees and retirees across Connecticut who have $1 million or more in retirement savings and want a plan built around their specific situation, not a one-size-fits-all template. Planning outcomes depend on individual circumstances and involve trade-offs.
Serving pre-retirees and retirees in Milford, Fairfield, and throughout Fairfield County, CT. Fiduciary. CFP. CRPC.