5 Actual Mistakes Retirees Need to Avoid

Let’s Get Into It

LET’S GET INTO IT—5 ACTUAL MISTAKES RETIREES NEED TO AVOID!

You’ve seen these guides before. “3 Retirement Mistakes Everyone Needs to Avoid” or “Top 5 Mistakes Every Retiree Makes.” Honestly, it’s usually the same generic advice: save more, spend less, plan ahead. But let’s get real—if you’re close to or in retirement, you’ve probably heard all that already. So, instead of giving you the same old rundown, the team at MDRN Capital wants to dive deeper and provide tips that you actually need to hear.

1. Not Understanding the Role of Debt in Retirement

2. Ignoring Sequence of Return Risk

3. The Social Security “Math” Trap

4. Thinking Retirement Is All About the Money

5. Not Planning for the “Go-Go” Years

5 Actual Mistakes Retirees Need to Avoid

Not Understanding the Role of Debt in Retirement

COUPLE A: They’ve saved $2 million for retirement. Sounds great, right? They’ve hit that magic number their advisor told them to aim for. But here’s the catch—they still have a mortgage, car loans, credit card debt, and maybe even a few payments left on that Disney Vacation Club membership they splurged on years ago. More than half of their yearly income is going to pay off these debts, and every time the market dips, they’re stressed about whether they can still meet their payments. Their retirement savings are essentially being drained to keep up with debt payments.

COUPLE B: They’ve saved $500,000 for retirement. Not nearly as flashy as Couple A’s $2 million. However, Couple B has something that Couple A doesn’t—zero debt. Their house is paid off, their cars are paid off, and they don’t owe a dime. They’re living comfortably on Social Security and a small pension, and because they’re not tied to debt, they can enjoy life without the constant worry of how market fluctuations will affect them. Even if the market takes a hit, they’re largely unaffected because they’re not paying off loans.

We all know the common refrain: “You need $1 million to retire!” or “What’s your retirement number?” But here’s the thing—what most people (and commercials) don’t tell you is that it’s not just about what you save; it’s about what you owe.

monthly payments—you’re also more exposed to unexpected events, like a market downturn or sudden health expenses. Let’s take a closer look at how debt can affect your retirement:

Why does debt matter so much in retirement? Here’s the simple truth: less debt equals more flexibility and security. When you have debt hanging over your head, it’s not just about the

So, who’s better off? Couple B, hands down. Less debt means less stress, more control over your finances, and a lot more peace of mind. Debt can silently erode your financial security in retirement—don’t overlook its impact.

5 Actual Mistakes Retirees Need to Avoid

2.Ignoring Sequence of Return Risk

You’ve probably heard the phrase “sequence of return risk,” but if you haven’t, don’t worry—you’re not alone. It’s one of the most important but least understood risks retirees face. Sequence of return risk is the risk that the timing of withdrawals from your retirement account will negatively affect your portfolio. But what does that really mean?

LET’S BREAK IT DOWN WITH AN EXAMPLE:

Mr. Jones and Mrs. Smith both retire with $500,000 and plan to withdraw $25,000 annually to live on. Over the next 25 years, they both average the exact same return— let’s say 8% annually. But here’s where the difference comes in: Mr. Jones has two terrible market years right after he retires, while Mrs. Smith enjoys two fantastic market years. Even though they average the same return over 25 years, by the time they hit year 15, Mr. Jones is completely out of money. Meanwhile, Mrs. Smith still has more than $1.8 million. How is that possible? It’s all about timing. Those first two negative years compounded Mr. Jones’s withdrawals, eating away at his principal faster than he could recover.

This is why sequence of return risk is so important. When you start withdrawing from your portfolio, especially during down markets, you’re locking in those losses. If your first few years of retirement coincide with a market downturn, your entire retirement could be in jeopardy unless you’ve planned for it. THE TAKEAWAY? Don’t leave your withdrawals to chance. Working with a financial advisor to create a withdrawal strategy that accounts for market volatility is essential for preserving your wealth in retirement.

MR. JONES

MRS. SMITH

5 Actual Mistakes Retirees Need to Avoid

The Social Security “Math” Trap

“When should I take Social Security?” It’s the million-dollar question, and everyone seems to have an opinion. Most calculators and experts will tell you to wait until 70 because you’ll receive the largest payout. Sounds like a no-brainer, right? Well, not so fast.

If you retire before 70 (as many people do), you’ll likely need to dip into your savings to cover your living expenses until Social Security kicks in. This can amount to hundreds of thousands of dollars. For example, let’s say you retire at 65 but wait until 70 to start Social Security. In those five years, you might spend $200,000 or more from your savings to bridge the gap. While it’s true that waiting until 70 gives you more in Social Security payments over your lifetime, that $200,000 from your savings could have been passed on to your heirs or invested elsewhere.

And here’s the kicker—Social Security stops when you and your spouse pass away, but that $200,000 you spent from your own savings could have been left to your children or grandchildren. So, while waiting until 70 might give you the highest payout on paper, it’s not always the most efficient strategy. THE REAL QUESTION IS: How much of your own money are you willing to sacrifice to get that higher Social Security payout? Sometimes, the breakeven point just isn’t worth it.

5 Actual Mistakes Retirees Need to Avoid

Thinking Retirement is All About Money

Sure, having enough money is important, but let’s talk about something that doesn’t get nearly enough attention—the emotional side of retirement. Many retirees are laser-focused on financial readiness, but they forget about the social and psychological aspects of this major life transition. Here’s the truth: Retirement can be a shock if you’re not ready for it. You’ve spent decades working, building routines, and having a sense of purpose tied to your career. When that’s gone, it can leave a big void. Boredom, loneliness, and even depression can creep in, and no amount of money can fix that.

Loneliness isn’t just an emotional issue—it can have real physical consequences, too. Studies show that loneliness can lead to higher healthcare costs, a lower quality of life, and even a shorter lifespan.* So, what’s the solution? Don’t just plan for your financial future—plan for your emotional well-being too. Build a social network, find hobbies, volunteer, or even work part-time doing something you love. Your retirement should be about enjoying life, not just managing your portfolio.

*Tan, S. S., Fierloos, I. N., Zhang, X., Koppelaar, E., Alhambra-Borras, T., Rentoumis, T., Williams, G., Rukavina, T., van Staveren, R., Garces-Ferrer, J., Franse, C. B., & Raat, H. (2020). The Association between Loneliness and Health Related Quality of Life (HR-QoL) among Community-Dwelling Older Citizens. International Journal of Environmental Research and Public Health, 17(2), 600. https://doi.org/10.3390/ijerph17020600

5 Actual Mistakes Retirees Need to Avoid

Not Planning For the “Go-Go” Years

LET’S CONNECT! If any of these mistakes hit close to home, or if you have other retirement questions, we’re here to help. Let’s chat about how we can make sure your retirement is as secure and enjoyable as possible.

We all like to imagine that retirement will be one long, leisurely vacation, but the truth is that your retirement spending will likely be higher in the early years—also known as the “go-go years.” This is when you’re healthy, active, and probably ready to take on all those projects, trips, and hobbies you’ve been putting off. Think about it: When you retire at 67, you’re probably still in good health, with plenty of energy to travel, renovate your home, or finally pursue that dream of learning to sail. But here’s the catch—all of that costs money.

MDRNCAPITAL.COM

667.222.0060

concierge@mdrncapital.com

The first few years of retirement are often the most expensive. Many retirees underestimate just how much they’ll spend during this time, and if you don’t account for it, you could end up depleting your savings faster than expected. THE SOLUTION? Make sure your retirement plan has the flexibility to accommodate higher spending in the early years. This way, you can enjoy your retirement without worrying about running out of money later on.

MDRN Capital LLC (“MDRN Capital”) is a registered investment advisor.

This content is intended to provide general information about MDRN Capital. It is not intended to offer or deliver investment advice in any way. Information regarding investment services are provided solely to gain an understanding of our investment philosophy, our strategies and to be able to contact us for further information.

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