Common Retirement Mistakes We See Again and Again

We all make mistakes with our money, and some of these errors can have lifelong consequences. Yet with a little forethought they can be preventable, and with a little initiative they can be fixed.

Our adviser team has many years of experience in helping clients to achieve their long-term goals. Along the way we have seen some financial planning and investment mistakes that people consistently make – which are worth sharing to help us all become better equipped to face retirement.

Not taking enough risk

While we never recommend you take a level of risk beyond what you can endure or are comfortable with, the persistent effects of inflation mean you should consider the relevance of taking some risk. This approach is not just important in the years before retirement, but because we are generally living longer you may have a multi-decade long investment horizon to consider throughout your retirement years.

Automatically taking all your tax-free cash

When we retire we are typically allowed to take up to 25% of our pension pot as a tax-free lump sum. Yet we should think carefully about what to do with this option: should we take all of it now or is it better to leave some of it to accrue for the years ahead? By keeping money in a pension, rather than moving it into a savings account when it is not needed, it could benefit from further tax-free growth.

A suboptimal approach to tax planning

Tax planning for retirement often follows general best practises, but to be really effective needs a more nuanced and personalised approach. We shouldn’t automatically assume, for example, that we should take all our retirement income from a pension.

There may be better alternatives like a taxable portfolio – where if you draw from this first, you may reduce your taxable income, while keeping your assets in a tax-free wrapper (such as a pension or an ISA) and sheltering your funds from IHT. It’s always worth assessing, too, if your pension is on the right track.

Too much focus on income-generating investments

Being diversified is one of the mainstays of long-term investing, a principle which also applies in retirement. To avoid an inefficient and unbalanced portfolio you should focus on total returns, a strategy that aims to offer the optimal mix of both capital and income returns.

Not maximising state benefits

Each of us needs a certain number of qualifying years of paying NI contributions to qualify for the full state pension (currently 35 years to receive £175.20 a week). But for whatever reason you may have missed out on some full years. You may therefore find it good value to top up any years where your NI contributions fell short – especially when you consider how long you could reap the benefits. Check your NI records here.


When we enter retirement it may be tempting to splash out or spend more than usual if major expenses like a mortgage are cleared. Again, we should consider the financial consequences of living longer than we expect and think about the steps we can take to live comfortably.

Playing the market

When investors have a retirement pot at their disposal they may be tempted to try and work their money harder. They may be unhappy if markets are not doing so well and feel they could do better.

But individuals regularly stumble when attempting to play the market and it’s all too easy to fall prey to the behavioural pitfalls that affect us all.

Putting mistakes right

We help clients to realise their financial goals by giving them the insights and visual tools to help them to make informed decisions and plan ahead with confidence. Our online planning tools give clients a great deal of freedom to model investments and flexibly change the variables as their circumstances change.

So while we all make mistakes with our finances, we shouldn’t be too disheartened – and know that it is usually possible to change course for the better. We are always here to help.

Please remember that when investing your capital is at risk.

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