My 2 Worst Retirement Mistakes
Category: Uncategorized
December 8, 2025 — In my 19 years of writing these Topretirements Blogs there have been so many great questions and comments from our Members. So I have had plenty of time to think about the best ways to plan for retirement, and the worst ways. Tackling the negative side, here are my two worst retirement mistakes. In the grand scheme of things, they are not so bad, compared to many worse ones I could have made.
- Not contributing enough to Roths.
At the time it seemed like a no brainer – contribute to my IRA or 401(k) plan so that I always got the maximum match, or put in the most I could afford if there wasn’t a match. Put in $10,000, get a $10,000 deduction on our income tax. But, as I am finding out in my late 70’s, that bird comes home to roost in the form of Required Minimum Distributions (RMDs).
Anyone who hits age 73 must start taking out these RMDs every year. They start out fairly modest (3.77% of your IRA/401(k) balances), but the percentage goes up every year. At age 100 you must take out 15.63%, if you are fortunate to live that long. I have been taking out RMDs since age 70 since I was under a previous iteration of the rules.
The problem with regular IRAs and 401(k)s is that the money you take out from RMDs or other withdrawals is taxed. Take out $20,000, you just increased your ordinary income $20,000, which, if your other income is high enough, might lead to doubling your Medicare Part B premiums. Roth retirement investments and earnings, on the other hand, can be taken out tax-free. There is no requirement to withdraw from your Roths. True, you didn’t get to deduct those Roth contributions when you made them. But you, your surviving spouse, and your heirs will never have to pay taxes on your contributions and their investment gains.
Bottom line here: I wish I had contributed the max allowed to Roth plans and put less into regular IRAs and 401(k)s. There is a way to avoid adding those withdrawals to taxable income by contributing them directly to qualified non-profits (maximum of $108,000). But if you need the money to live on there is going to be a big tax bill. As an example, 3.77% of $1,000,000 is $37,700 – and that goes up every year you get older.
2. Not taking Part D insurance at age 65
What was I thinking (obviously, not much)! Part D of Medicare, prescription drug insurance, should be taken out when you qualify for Medicare at age 65, The premiums are modest: the national average for a standalone plan to be around $34.50 to $39 in 2026. Many Medicare Advantage premiums have a $0 premium. But, if you don’t opt for coverage, there is a permanent late enrollment penalty added to your monthly premium. That is calculated as 1% of the national base premium (around $39 for 2026) for each full month you didn’t have coverage or equivalent insurance. That’s 1% penalty per month, and it adds up quickly.
I finally wised up and got a Part D policy around the age of 70. My mother was in the same situation (I urged her to get in at age 100), so I should have known better!
Bottom line
These are the 2 worst retirement mistakes I think I have made. Fortunately, they are not nearly as bad as some others that can be made. The number 1 retirement error is, of course, not saving enough and/or starting too late. Unfortunately, there are many others that can make it harder to have a great retirement.
For more ideas on retirement mistakes see the General Retirement or Retirement Planning categories in our Blog
Comments? What are your biggest retirement mistakes. Please share them so others can be aware of the pitfalls.
Comments on "My 2 Worst Retirement Mistakes"
Stevo says:
Never had the part D problem but I'm with ya on the IRA issue. Here is now I would invest my savings if I could turn back clock to 55. In order of importance:
1. Get the 401K employer match.
2. Sign up for a high deductible healthcare plan and max out an HSA.
3. Max out a ROTH IRA.
At 55yo I would only contribute more to the 401K if I had extra money to save after #1-2-3 were funded for the year. I also would NOT use the HSA for current medical expenses. It would become a long term investment account. What's better than putting tax free money (including no SS or Medicare tax from payroll deductions) into an account to get tax-free income in the future. To be used tax-free it has to be spent on qualified medical expenses but in 20 years you'll probably have lots of opportunity for that. After 65 you can use it for other reasons but it will be added to your income. Your spouse can inherit the account on death and continue to use it tax-free for medical expenses but any other person would have to treat the inheritance as income so be careful how you set it up. The HSA deductions will not show up on your yearly SS income because you don't pay taxes on it so be sure to talk to someone to see how that may affect you. I started this approach at 62 so it didn't do much to my predicted SS payments.
I believe the taxes paid on Roth IRA contributions now will be much lower today than 10-20 years in the future but who knows. Having that income sheltered from eventual taxes in the future can save you from Medicare IRMAA, a form of means testing too.
JCarol says:
Can't say I have any retirement mistakes or regrets, but it's early yet.
The changing fortunes of owning a small business necessitated frequent pivoting when it came to retirement savings. Sometimes feast, sometimes famine. Large chunks set aside some years, not a penny to spare in others.
IRAs comprise roughly 30% of my & my husband's retirement savings. 2025 & 2026 will be our first years of RMDs so we'll check with our accountant about best strategies for withdrawals.
If larger withdrawals don't kick us into higher tax brackets, it might be wise to take more than the RMDs and convert that money into ROTHS.