This Financial Planner Shared 4 Mistakes People Commonly Making When Preparing for Retirement

Most Americans don't have enough money saved for retirement. When you start planning for retirement—which should be now—you know the basic idea: save money and don't spend it. But it does get a little bit more complicated than that.

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Jeremy Zuke is a financial planner with Abundo Wealth, which advises people entering or already in retirement. He shared four mistakes that they commonly see in people approaching retirement or who are already retired. Learn from these mistakes and do it differently and better.

Here are mistakes we commonly see for clients approaching (or in) retirement:

Not Planning for Taxes

Many pre-retirees have built up significant tax-deferred assets but have little saved in Roth or taxable accounts. For those with large accounts, this leads to potentially high tax burdens later in life when those accounts are used to fund lifestyle and required minimum distributions (RMDs).

Running Out of Time

People who have been great savers all their lives can have trouble developing their spending muscle in retirement. As much as we focus on not running out of money, running out of time before accomplishing retirement goals is just as big of a risk—and an underappreciated one.

Being Too Safe

Risk-averse retirees confuse principal security with "safety," leading to very risky retirement holdings concentrated in CDs and cash equivalents. A 65-year-old retiree typically needs to plan for a 30-year horizon, and inflation or unforeseen expenses make that supposedly safe approach actually quite risky.

Buying Annuities

Retirees purchase extremely expensive (and difficult to get out of) annuities and life insurance policies under the promise of downside avoidance and tax advantages. The unfortunate reality is most of those products do much more to help the retirements of the people selling them than the retirees who buy them.

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