Principales conclusiones
- Age 60+ is a challenging time for managing personal finances.
- Inflation is a fact of life and needs to be anticipated in household budgets.
- Retirees need a plan to avoid withdrawing too much or too little of their accumulated savings.
- RMD withdrawals must start at age 73 or 75; otherwise there is an additional 25% tax penalty.
- Early Social Security claiming permanently reduces benefits and claiming later increases them.
- Financial accounts should be reviewed regularly; estate planning documents when life changes.
- Older adults need to carefully consider their Medicare choices and make plans for long-term care.
At no other time in life are finances more challenging than age 60+. Many retirees have fixed incomes that do not keep up with inflation. In addition, there are critical decisions such as the timing of Social Security benefits, choice of Medicare plans, and use of required minimum distribution (RMD) withdrawals.
Other challenges include health care and long-term care expenses, fraud and scams, longevity risk (risk of outliving assets), reduced earning ability, legal and estate planning needs, debt in retirement, and death of a spouse or partner. Not surprisingly, some older adults make financial errors.
This article describes 20 financial errors commonly made by older adults. The errors are grouped into five categories: budgeting, saving, and investing, financial and estate planning, health care, income taxes, and other common errors. For each common error, there is a suggested remedy.
Budgeting, Saving, and Investing
Underestimating Inflation
Many people don’t plan ahead for rising prices for food, health care, housing, insurance, utilities, and more. When inflation is not anticipated when updating a budget, rising prices can create financial stress. Budgets stop working accurately when old spending estimates no longer match current costs.
Remedy: Add a 3%-5% cost increase to inflation-sensitive expenses when your budget is updated.
Low Interest on Savings
Many older adults prefer “brick and mortar” banks where they can talk to a teller. Online banking feels unfamiliar or confusing. Unfortunately, the annual percentage yield (APY) on savings at large, traditional physical banks is often 0.01% to 0.04% vs. about 3.5% for online banks (May 2026).
Remedies: Have someone teach you to use online banking or look for special APY deals at physical banks.
Improper Asset Withdrawals
Taking large withdrawals from retirement accounts early in retirement increases the risk of running out of money later. Conversely, withdrawing too little means someone will unnecessarily leave a lot of money on the table that could have been spent on a higher-quality lifestyle.
Remedies: Use RMD withdrawals, the 4% Rule, and/or annuities for a spend-down strategy you won’t outlive.
Being Too Conservative or Aggressive With Investments
Some older adults keep too much money in low-interest accounts that do not keep pace with inflation. Others take excessive investment risk to make up for savings procrastination and expose their retirement savings to large market losses with limited recovery time.
Remedies: Put some money in equities (with a cash buffer), and never invest above your risk tolerance.
Financial and Estate Planning
Not Saving Enough for Retirement
Many older adults never use online calculators or consult a financial advisor to prepare for retirement. As a result, they lack a specific savings goal and underestimate how much money they will need based on key variables like retirement age, life expectancy, and inflation.
Remedy: Use at least three online retirement calculators like this one to calculate what you need to save.
Claiming Social Security Too Early
Taking benefits at the earliest possible age (62) permanently reduces monthly benefits by 30%. With the exception of financial need and/or a poor health prognosis, waiting longer is often advisable because benefits permanently increase by 8% per year for each year past Full Retirement Age (FRA) until age 70.
Remedy: Download a personal benefit estimate to see the math and consider delaying even just one year.
Not Seeking Financial Advice When Needed
Complex decisions involving retirement accounts, income taxes, investments, and estate planning can lead to costly mistakes without qualified guidance. Not all help costs money, however. VITA and TCE can assist with tax preparation and SHIP with Medicare and long-term care insurance guidance.
Remedy: Search for a financial advisor, if needed, at www.napfa.org and www.letsmakeaplan.org/
Failure to Monitor Financial Accounts Regularly
Some older adults do not use online account access. Not reviewing bank statements and credit and investment accounts regularly (at least once a week), however, can allow billing errors or unauthorized transactions to go unnoticed.
Remedy: Have someone teach you how to access online accounts and review them at least weekly.
Failure to Update Documents
Outdated wills, living wills, life insurance and IRA beneficiaries, powers of attorney, and personal representatives can create legal and financial problems for families. An extreme example: assets go to a divorced spouse because a will or 401(k) plan beneficiary designation was never updated.
Remedy: Review people named in documents and change as needed. Use this worksheet to record their names.
Health Care
Not Planning for Health Insurance
Everyone needs a health care plan in later life. Otherwise, medical expenses, prescriptions, dental care, etc. can be a financial burden. A key decision is Medicare Advantage vs. Original Medicare. It is often difficult to buy a Medigap policy later if you want to switch back to Original Medicare.
Remedy: Carefully review options before retiring and during Medicare open enrollment (Oct. 15 to Dec. 7).
Not Developing a Long-Term Care (LTC) Plan
Assisted living, memory care, and nursing homes are very expensive, and many people fail to prepare for these possibilities. Planning options include LTC insurance, self-funding, guaranteed income sources (e.g., a pension), Medicaid, and/or moving into a continuing care retirement community.
Remedy: Contact a financial planner and/or local SHIP counselor for information and advice.
Impuestos sobre la renta
Poor Tax Planning
Some retirees fail to consider how RMD withdrawals, pensions, Social Security and investment income affect income tax bills. They also fail to take advantage of tax planning strategies such as early retirement plan withdrawals, Roth conversions, bundling deductions, and qualified charitable distributions.
Remedy: Do a projected tax return each fall and use the result to adjust tax strategies and withholding.
Ignoring Required Minimum Distributions
Failure to take required withdrawals from tax-deferred retirement accounts after reaching age 73 (born 1951-1959) or 75 (born 1960 or later) can lead to costly tax penalties. Specifically, the extra tax is 25% of the amount that should have been withdrawn but was not.
Remedies: Set up automatic withdrawals with plan custodians and use this RMD planning worksheet.
Other Common Errors
Subsidizing Adult Children
Repeatedly providing financial support to adult children can jeopardize retirees’ retirement security. Common effects include reduced retirement savings, reduced emergency reserves, delayed retirement, and high asset withdrawal rates that increase the risk of outliving savings.
Remedy: Have a frank conversation with children and develop a plan to wean them off parental support.
Cosigning Loans for Family Members
Older adults sometimes cosign loans for children or grandchildren without understanding the financial risks. If the borrower defaults, the cosigner becomes fully responsible for making payments.
Remedy: Make a personal decision rule to never cosign a loan. Period. Help borrowers find other resources.
Lack of Communication About Finances
When older adults do not discuss their finances with loved ones, families may face confusion, conflict, and financial hardship during emergencies, illness, or following death. Key things to share include the location of important documents, estate plans, insurance coverage, and digital account passwords.
Remedy: Create a list of topics and convene a family meeting to discuss your finances.
Falling for Scams
Older adults are frequently targeted by phone, romance, and tech support scams, fake charities, fraudulent investments, and identity theft schemes. Why? They have accumulated assets, were raised to be polite, and are often more accessible than others.
Remedies: Ignore unsolicited calls, monitor financial accounts regularly, use strong passwords and 2-factor authentication, shred sensitive documents, and learn about common scam tactics.
Relying Too Heavily on Financial Salespeople
Possible consequences include buying unsuitable financial products, paying high fees and commissions, being locked into long contracts, overcomplicated investments, and conflicts of interest when advisors are held only to a “suitability” standard rather than a fiduciary duty (i.e., putting client needs first).
Remedies: Use a fiduciary advisor, verify information, and never invest in anything you don’t understand.
Keeping a Large Expensive Home
Many older adults remain in homes that become financially and/or physically (think: yard work) difficult to maintain. Not to mention future LTC challenges for those who age in place. Emotional attachment, memories, and reluctance to change make the thought of downsizing difficult.
Remedy: Weigh other housing options (e.g., a condo or moving in with family) and make a change.
Ignoring Signs of Cognitive Decline
Cognitive decline can gradually interfere with the ability to manage money safely and accurately. Warning signs include repeated late payments, difficulty paying bills and balancing accounts, duplicate purchases, and large unexplained withdrawals.
Remedies: Automatic bill payments, creating a durable power of attorney, and naming trusted contacts.
En resumen
Older adults make financial errors for a variety of reasons including poor planning, inertia, cognitive decline, and lack of communication. This article described 20 common errors and, more importantly, dozens of remedies to avoid them. When people know more, they often do better.
