Episode 49: The True Costs of Retirement Are More Than You Think (Part 2)


Hi there, and welcome to the Her Retirement podcast. This is episode 49, part 2 of the True Costs of Retirement. Last week I covered cost mistakes 1-8. This week I’m going to cover 9-16. These are the 16 most devastating mistakes you can make when estimating your costs in retirement.

As a review, here’s all 16:

  1. Opportunity cost: you don’t start saving AND investing soon enough
  2. Lack of a Long Term Care plan
  3. Not estimating life expectancy correctly
  4. A realistic estimate of healthcare costs
  5. Not accounting for inflation
  6. Forgetting about some big-ticket expenses you’ll likely have
  7. Changing spending habits
  8. Being in the sandwich generation: loaning money to your kids or parents, or taking time off from work to care for parents
  9. Spoiling the grandkids
  10. Not understanding or factoring in taxes (there’s a huge opportunity to make your money last longer with smart tax planning)
  11.  Forgetting about fees
  12.  Getting divorced
  13.  Take on too much or new debt prior to retirement
  14.  Taking too much money from your nest egg each year
  15.  Underestimating the impact of market fluctuations


16. And I’m going to add a 16th mistake: not getting educating and wasting time not doing anything or planning with the wrong team.


If you didn’t catch last week’s episode 48, go back and take a listen before or after listening to this episode.

Let’s start with number 9…


9. But they are so cute…the grandkids, that is.

So easy to spend way too much on the adorable little grandkiddos. This is another area where you need to set some boundaries for yourself and be disciplined. If you give too much, you may risk your own retirement needs.

How to Better Prepare?

Have a plan for what you’re willing to pay for before any grandchildren are born. And make it equitable for all the grandchildren. Also, make sure your children know what expenses you’re willing to cover. This is especially important when it comes to education costs. This conversation is important, so your children understand what they need to make the appropriate plans.


10. Taxes

Many people have no clue how much taxes can take out your retirement. And they also do not indicate that there are legal strategies to avoid paying too much in taxes.

One example is that you WILL have to pay taxes on your retirement savings plan withdrawals, and the government forces you to start taking withdrawals at age 72 if you haven’t yet started taking your withdrawals.

How to Better Prepare?

Number one: find a tax-smart financial or retirement advisor ASAP. There are many things you can do well before retirement to make yourself much more tax-efficient in retirement (i.e., Roth IRAs, which I talked about in last week’s podcast).

Number two: make sure you (and your advisor) create a combination tax strategy that leverages taxable, tax-deferred, and tax-free accounts. Make sure to ask the advisor about Roth conversions and also for them to show you your tax-efficient withdrawal strategy in retirement. If they don’t know how to do this, find another advisor. Not all financial advisors, planners or investment advisors, or the guy at Fidelity or Vanguard know anything about tax planning or retirement planning, for that matter. Who you work with matters…a lot.


11. The Fee Factor

According to research, retirement can cost more than expected because of people’s high fees on investments and retirement accounts. Somebody with $100,000 in a retirement account and terms of 2.5% over 30 years, for example, would pay about $40,000 more in fees over that time than if the fees on their account had been just 1.5%.

That’s a lot of money.

How to Better Prepare?

Check your retirement account statements to see what fees are being charged. If the investments you have chosen have high fees, it might be time to switch.

If your retirement account offers low-cost index or target-date funds, consider those. An index fund is a mutual fund that tracks the performance of a major index, such as the S&P 500. A target-date fund reduces the risk in your portfolio by shifting from stocks to bonds as you near retirement.

If you have an advisor, make sure you get full disclosure of all the fees you are paying, the advisor, and the fund fees. If everything isn’t 100% transparent, find another advisor.


12. Divorce Can Do You In

Divorce can be devastating, but gray divorce is on the rise. According to the Pew Research Center, the divorce rate has doubled since the 1990s for American adults ages 50 and older. Marriages are failing as people near retirement age.

How to Better Prepare?

This podcast isn’t about marriage counseling, so I can’t give you any advice on avoiding gray divorce other than don’t get married. LOL. But seriously, one way to avoid some of the financial fallout from a divorce in retirement is to have a prenuptial agreement. However, that might not be an option if you’re already married. Focusing on your marriage and your relationship could be an essential investment in your monetary future. If this isn’t in the cards, there are some things you can do to avoid as much financial fallout from a divorce as possible.

  1. Make sure you know everything about your financial situation. Not only your own money but your spouses as well.
  2. Make sure you have a copy of all the essential documents for your shared assets and liabilities, as well as legal documents.


13. Ditching Debt

Ideally, you’ll have paid off all debts — including your mortgage — before you retire. But taking on new debt in retirement by living beyond your means is a recipe for disaster, according to every expert. Bad debt is to be avoided at all costs in retirement.

How to Better Prepare?

If you take on new debt in retirement, be sure you are taking proactive steps to pay it down as soon as possible. One option is to refinance if lower interest rates are available. Another option is debt consolidation, which can be helpful if you have multiple high-interest-rate debts. You should also try cutting down on spending to have more money to dedicate to paying down debt and consider taking on a side hustle to bring in income in retirement that can be explicitly used to pay off your debts.


14. Withdrawing Too Much Money in Retirement

Conventional wisdom says you should plan to withdraw 4% from your nest egg each year (this is known as the safe withdrawal rate), but this might be too much. A Morningstar study found that with a 4% withdrawal rate, there was only a 50% chance that funds would last for 30 years in retirement. The amount you should withdraw will depend on the size of your nest egg and economic circumstances, so don’t just follow blanket rules of thumb such as the dated 4% rule. In today’s market environment and traditional 60/40 stock/bond portfolios, the safe withdrawal rate is 2-3%. That’s a big difference in income. On a million-dollar portfolio that’s $20,000 or $30,000 vs. $40,000.  There are some unique outside-the-box strategies for increasing your safe withdrawal rate. In past podcast episodes, blog posts, and my masterclass, I’ve talked about these. If you’d like to review them with me, shoot me an email at:

How to Better Prepare?

The Morningstar study found that the ideal withdrawal rate is closer to 2.8%, but this will vary based on your circumstances. It’s best to meet with a retirement advisor (like to folks at Your Retirement Advisor) to come up with a withdrawal strategy that will allow you to live comfortably without worrying about running out of money in retirement.


15. Market Fluctuations

A lousy market or ups and downs of the market can ruin the best-laid plans, even if you have a safe withdrawal rate all figured out. The need is one thing we can’t control, but not planning around a lousy market can cost you dearly.

How to Better Prepare?

Imperfect markets make people misbehave (i.e., pulling their money out as a knee-jerk reaction vs. staying the course).  Due to the inevitable volatility of the market throughout your retirement, Forbes recommends assessing your withdrawal and return rates each year to determine if your withdrawal rate needs to be raised or lowered.

Also, if you’re nearing retirement, you need to market-proof your portfolio, and you need a bucket of money to get you through a downturn so that you don’t have to raid your investment accounts.

Making a portfolio projection in all market environments is critical. You need to know how your portfolio will fair in a down market.

A retirement advisor can help ensure your retirement strategy and portfolio are aligned with your retirement goals and protected from market fluctuations as much as possible.

I will add a 16
th mistake:

16. Not getting educated and wasting time not doing anything or planning with the wrong team.


I hope this episode of my podcast has given you some insight into actual retirement costs.  There are many ways to better plan for these costs, avoid mistakes and retire with more. If you’d like to chat about your situation, as always, email me at: I can also connect you with whatever planning and advice resources you need.  Here’s to knowing more and having more, and getting her done.






Comments are closed.