Date
Oct 20, 2025
Category
Content
Introduction
As you approach retirement, your retirement planning and investment strategies begin to matter more than ever. You're no longer just playing the long game with investments. Every decision counts, and the room for mistakes gets smaller.
That’s why avoiding common errors can be one of the smartest things you do for your future self. It’s easy to get caught up in market trends or remain focused on market returns, but the closer you get to your retirement date, the more you need a strategy built around stability, clarity, and your personal goals.
Some choices might seem harmless at first—like taking on a little more risk or sticking with the same portfolio you've had for years. But these decisions can have real implications for the wealth that you’ve worked so hard to build.
In our view, this is where personalized guidance becomes a real asset. If you’re in Tega Cay or Fort Mill and thinking about your next financial steps, having a relationship with a local investment advisor team can make all the difference. Let’s walk through a few key mistakes people make with their retirement planning and look at how to steer clear of trouble before it starts.
Overestimating Risk Tolerance
During your younger years, taking bold swings in the market might have felt right. It probably was right. However, what works in your 30s and 40s doesn’t always line up with the needs of someone who is five to ten years from retirement. So, what happens when investors overestimate what they can truly handle? They end up riding the highs with excitement and sitting through tough patches filled with anxiety, doubt, and losses they don’t have years to recover from.
Here’s where things can go sideways. A market decline right before or just after retirement can decimate your retirement. Once you retire, you are likely starting to draw from those retirement accounts, not adding to them. Therefore, the timing of a significant market loss can make a bigger impact.
We aren’t talking about the minor bumps that come with investing. Market corrections of 10-15% are table stakes for investors. We are discussing the major bear markets that can have equity declines of 30-50%. This type of decline could now mean cutting back on travel, reducing income, delaying house repairs, and worrying whether or not your savings will last.
There are generally two paths most pre-retirees lean toward:
- Conservative Approach: Investments are focused on preserving capital. These include bonds, cash equivalents, and income-generating assets with lower volatility. Many retirees opt for an annuity strategy that provides some level of guaranteed income.
- Probability-Based Approach: Investments combine short-term and growth-oriented portfolios in a way that allows markets to continue marching along, while accepting dips along the way. The mistake that can happen with retirees is when someone sees an upward trend and thinks they’re okay with risk—ignoring how they’d feel should their retirement funds drop by 40-50% right when they're ready to use it.
Think about a couple in Tega Cay who is nearing retirement. They’ve done well with aggressive investments for years and decide to stick with a high-growth strategy. But, when markets drop in the year they plan to retire, their portfolio shrinks significantly more than they expected. They’re left choosing between working longer or scaling back their retirement budget. That kind of surprise is what good retirement planning is designed to help you avoid. Having an honest conversation about what levels of risk you’re actually comfortable living with can make a big difference in how stable your retirement income will feel.
Neglecting to Diversify
Putting all your eggs in one basket is never a good move when it comes to retirement investing. Still, many people fall into this habit without realizing it. Maybe it’s because they’ve had success with a certain stock or prefer real estate over everything else. Either way, not properly diversifying can invite unwanted surprises.
There’s a joke within the investment advisor community that “Diversification means always having to say you’re sorry.” The truth is that the goal of diversification is to help your portfolio weather changes in the market. When one area dips, another might stay steady or even grow.
The goal isn’t to avoid every loss. It’s to avoid being too exposed when things shift. A well-balanced portfolio can help smooth out the ride, which becomes more important the closer you are to drawing income from your accounts.
To build more balance into your investments, consider:
Mixing asset classes like stocks, bonds, real estate, and cash
Staggering risk levels so not everything reacts the same way to market drops
Looking at industry data and trends to keep from overloading in one sector like tech or energy
Reviewing international versus domestic equity holdings
Rotating out of concentrated positions if one holding has grown too large
It’s also helpful to look under the hood of your portfolio. Sometimes your mutual funds or exchange-traded funds that you thought were different actually own the same assets. That defeats the purpose of diversifying in the first place.
Creating the right portfolio mix depends on your timeline, income plan, and ability to absorb risk. You should note that your ability to absorb risk isn’t necessarily your risk tolerance. Sometimes, you don’t have the capacity (from a financial standpoint) to absorb a large decline in your portfolio. Being resilient with your risk tolerance isn’t the same thing as have a high risk capacity.
We recommend reviewing your investment allocation every year to make sure it still fits where you are. A retirement plan and investment strategy isn’t meant to stay locked in forever. It should be flexible to shift with life, and that includes making sure it’s not too concentrated in any one place.
Ignoring Fees and Expenses
Even strong investment returns can be held back by high fees and hidden expenses. A lot of people don’t notice these costs until they add up and start to eat into gains. Whether it's management fees, fund expense ratios, or trading charges; these small cuts across your portfolio can make a noticeable difference, especially when you’re looking to retire within the next few years.
One of the easiest ways this mistake shows up is staying invested in something simply because you've had it for a long time. Maybe it’s a fund you bought years ago, but the fees are no longer competitive—or clear. Other times, people simply don’t know about the internal fees or expenses in their portfolio.
Variable annuities are notorious for having high internal fees. So, it helps to scan through your account statements carefully and know what you’re paying for.
Here are a few areas where fees can sneak in:
Annual fund operating costs
Advisory or management fees
Transaction fees when buying or selling investments
Deferred sales charges
Extra service or custodial costs for IRAs or retirement plans
Internal fees in variable annuities
12b-1 fees in mutual funds
Fees aren’t inherently bad (sorry Bogleheads), but understanding what you are paying can help you choose smarter options. Picking lower-cost funds for the same goal or being mindful about actively managed funds can help you say efficient with your portfolio costs. If you’re not sure what the ongoing costs look like inside your accounts or what that means for your long-term strategy, getting some professional eyes on your plan can go a long way.
Not Adjusting Investments to Life Changes
We believe that your investment plan should move with your life circumstances. One of the more overlooked missteps is holding onto the same strategy no matter what shifts around you. Retirement isn’t just triggered by age. It’s affected by illnesses, career changes, family responsibilities, and new priorities. If your plan doesn’t adjust for those things, it can leave you off track before you even notice.
Think about a couple in their late 50s planning to retire at 67. They’re healthy, earning good income, and have an aggressive growth allocation that is built to grow over time. But one of them gets diagnosed with a medical condition that changes everything. Retirement might need to come sooner, while they may face unexpected costs. Suddenly, they’re no longer in a position to ride out years of ups and downs. If the portfolio doesn’t adjust, their risk exposure may hit harder than they can handle.
It’s a good idea to review your investment setup when big moments hit like:
- Serious health issues
- Loss of a spouse
- Moving to a new state
- Changing retirement dates
- Supporting adult children or grandchildren
- Inheritance or large financial gifts
- Any major life event
These life shifts aren’t always predictable, but having regular plan check-ins once or twice a year helps. Retirement investments shouldn’t sit on autopilot. Your goals may shift, your income needs may rise, and the time horizon you’re working with may shrink. Your plan should grow and shift right along with you.
Falling for High-Risk, High-Reward Schemes
As retirement nears, it might get tempting to chase after one big win that could boost your savings quickly. This is quite common in the middle of bull markets. This temptation can open the door for all kinds of high-risk investments—opportunities sold as once-in-a-lifetime or can’t-lose. The problem is, these fast tracks rarely work the way they’re pitched and usually carry risk that doesn’t make sense for someone a few years away from drawing retirement income.
These schemes often show up as private investments, one-off real estate flips, startup backing, trendy digital assets, or urgent-sounding opportunities tied to markets you don’t fully understand. Someone might say the risk is small or that they’ve already seen great upside results. But, even if the story sounds trustworthy, the risk usually runs higher than what’s reasonable for a retirement-focused portfolio.
Before putting your money into something that seems too good to pass up, ask yourself:
- Can you explain how the investment makes money in simple terms?
- Does it come with guarantees, or is it based on assumptions?
- Could you afford the full loss if it doesn’t work out?
- Have you taken steps to confirm the source is trustworthy?
- Can I have all the details so that I can discuss with my financial advisor?
If you aren’t fully sure, it’s better to slow down and talk it through with someone experienced. High-reward talk can hit hard when you want to catch up on savings or leave a legacy, but the downside might create setbacks you can’t easily recover from. Stocks and real estate carry enough volatility already. You don’t need a hard-to-track or hard-to-value asset dragging everything else down.
Investing Wisely for a Secure Retirement
Retirement is a big milestone, and getting there takes more than saving what's left over. The investments you choose, how much risk you take, and how you adapt to life changes all work together to shape what retirement looks like. Avoiding mistakes doesn't mean being perfect. It means knowing when to change course, when to ask for help, and when to consider whether your money is doing what it should.
If you're in Tega Cay, Rock Hill, or Fort Mill and starting to think through the final phase of your working life, now’s the time to ask: is my portfolio really built for the years ahead? What worked when you were focused on growth might not fit your needs once income and protection take center stage. Getting a second opinion and taking the guesswork out of your choices could be the most meaningful next step you take.
It’s always easier to prevent a mistake than fix one later. Building your retirement income plan early can help you avoid the stress of rushing into changes at the last minute. The peace of mind, knowing you’ve avoided the biggest missteps and planned intentionally for your future, is worth far more than last-minute guesswork.
If you're ready to fine-tune your retirement strategy and set yourself up for a stress-free retirement, connect with our team at Vertex Capital Advisors. We provide personalized guidance and a retirement planning process that is designed to protect your lifestyle and future goals.
Investment advisory and financial planning services offered through Advisory Alpha, LLC, a SEC Registered Investment Advisor. Insurance, Consulting and Education services offered through Vertex Capital Advisors. Vertex Capital Advisors is a separate and unaffiliated entity from Advisory Alpha, LLC. All written content on this site is for information purposes only. Opinions expressed herein are solely those of Michael H. Baker, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. This website may provide links to others for the convenience of our users. Michael H. Baker has no control over the accuracy or content of these other websites. Please note: When you access a link to a third-party website you assume total responsibility for your use of linked website. Links and references to other websites and third-party content providers are offered for your convenience. We do not necessarily prepare, monitor, review or update the information provided by third parties. We make no representation or warranty with respect to the completeness, timeliness, suitability, or reliability of the referenced content.
