Financial planning for retirement doesn’t stop once you’ve retired. Throughout your retirement years, it’s necessary to employ smart money management strategies and avoid common financial pitfalls that could erode your savings. 

Your Ameriprise financial advisor is here to help you find and maintain a balanced financial approach during these years, so that you can achieve long-term financial security and live the retirement you’ve always envisioned. 

Here are five common retirement mistakes to avoid: 

1. Overspending 

Retirement often comes with the joys of more free time and flexibility — which may make it easier to overspend. And in the early retirement years, especially, your expenses can add up as you adjust to a new lifestyle, such as more events with grandchildren, a home renovation, big-ticket hobbies or travel. 

Additionally, inflation — even at lower levels of 2 to 3% — can further erode your purchasing power over time and increase the overall amount that you may be spending in retirement. 

Learn more: How to estimate expenses in retirement 

2. Failing to revisit your withdrawal rate 

Historically, a properly diversified retirement portfolio could typically sustain withdrawals of about 4% per year, adjusted annually for inflation, for approximately 30 years. However, this isn’t a one-size-fits-all number, and your withdrawal rate may need to change as personal and external circumstances change.  

For example, during a market downturn, it may make sense to temporarily limit withdrawals to allow your investments to recover. Or perhaps you need to increase your withdrawal rate to satisfy the required minimum distributions (RMD) mandate from the IRS. Overall, your withdrawal rate should account for your current finances, future income, goals, the external environment and other considerations unique to you.  

3. Underestimating medical expenses 

Medicare is a valuable program for many retirees, but it wasn’t designed to cover health care expenses in full. In some cases, premiums, deductibles and copayments for covered services may become significant. Further, Medicare does not cover the cost of care for dental, vision and hearing conditions, or long-term care. Overall, underestimating these expenses may mean you’ll have less to spend on discretionary pursuits and other lifestyle interests. 

Learn more: Planning for health care costs in retirement 

4. Taking Social Security at the wrong time 

Because Social Security income lasts your entire life, deciding when to file for it is key. You can begin receiving this federal benefit as early as age 62 — but in doing so, your monthly benefits may be reduced for life. If you’re able to wait to collect benefits, it can be worth it in the long run. However, everyone’s situation is unique, and waiting may or may not be the right choice for you. 

5. Retiring too soon 

Retiring early is a common aspiration for many, but this goal requires intentional planning to account for the longer time horizon. Early retirement requires you to have more assets to pay for essential and lifestyle expenses, account for inflation and self-fund your health care before you are eligible for Medicare at age 65.  

There are also other impacts that could potentially set you back financially. For example, if you choose to retire at a younger age, it could result in lower Social Security benefits due to lower lifetime earnings. Or, if you take an early withdrawal from your retirement accounts to fund an early retirement, you may be subject to a 10% penalty and taxes. 

Learn more: When should I retire? 

Stay more confident throughout retirement 

Your Ameriprise financial advisor is here to help you stay on track throughout your retirement and can help you avoid these common financial mistakes.