5 Mistakes to Avoid as You Get Close to Retirement

5 Mistakes to Avoid as You Get Close to Retirement – Clear, Tax-Smart Guidance for People Close to Retirement

Are you close to retirement – or recently retired – and wondering how to dodge the biggest (and priciest) errors people make in their final working years? In this episode, Phillip Smith, CRPC®, financial planner at Tidepool Wealth Strategies, breaks it down in plain English.

What you’ll learn

00:30 Intro – why this topic matters now

01:24 Mistake #1 – getting aggressive too late

02:58 Mistake #2 – Ignoring Sequence-of-Returns risk

04:25 Mistake #3 – Overestimating retirement income

06:02 Mistake #4 – Waiting to Long to Deal With Taxes

08:46 Mistake #5 – Not Planning LIFE after Retirement

10:18 Wrap-Up and Closing

By the end, you’ll have a practical, tax-smart retirement strategy you can use right away.

Helpful Links

• Schedule a 20-minute call – https://www.tidepoolwealth.com/contact
• More videos and podcast episodes – https://www.youtube.com/@tidepoolwealth

#retirementplanning #closetoretirement #abouttoretire #taxsmartretirement #retirementadvice

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Sources:

1. Center for Retirement Research at Boston College – “Do Retirees Want to Consume More, Less, or the Same as They Age?”
    https://crr.bc.edu/do-retirees-want-to-consume-more-less-or-the-same-as-they-age/ 
2. Kiplinger – “How to Avoid the Widow’s Penalty After the Loss of a Spouse”
    https://www.kiplinger.com/retirement/how-to-avoid-the-widows-penalty-after-the-loss-of-a-spouse 
3. U.S. Bureau of Labor Statistics – Consumer Expenditures by Age Group
    https://www.bls.gov/cex/ 

Thanks for tuning in to this episode of The Perfect Retirement Plan, and remember: it's not about having the smartest financial advisor, the most money saved, or the highest probability of retirement success. The perfect retirement plan, for you – is the one you act on.

Phillip Smith, CRPC AIF |  Financial Planner
Tidepool Wealth Strategies
450 Country Club Road, Suite 350 | Eugene, OR | 97401

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Additional Disclosures: 
The opinions contained in this material are those of the author, and not a recommendation or solicitation to buy or sell investment products. This information is from sources believed to be reliable, but Cetera Wealth Services, LLC cannot guarantee or represent that it is accurate or complete.
All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful. 

Transcript

Episode: “Timing the Tide: 5 Mistakes to Avoid as You Get Close to Retirement”

Outline:

• Timing the Tide: Why Your Final 5 Working Years Matter
• Mistake #1: Getting aggressive too late
• Mistake #2: Ignoring the Sequence of Returns
• Mistake #3: Overestimating Your Retirement Paycheck
• Mistake #4: Waiting Too Long to Deal with Taxes
• Mistake #5: Leaving Life Planning Out of the Financial Plan

[Intro – Standard Opening + Personalized Welcome]

Hi, I’m Phillip Smith, financial planner with Tidepool Wealth Strategies, guiding late-career professionals toward retirement with clarity, confidence, tax-smart income, and purpose. Welcome to The Perfect Retirement Plan?

Today we’re wading into a topic that gets surprisingly little attention--yet has some of the biggest consequences. The final five years before retirement are what I call the time to time the tide.

Here’s what I mean: as the tide of your career begins to recede, what’s left behind is your tidepool. If you’ve stocked it well, with enough income sources, risk buffers, and clarity--you’ll thrive. But if you’ve waited too long or scrambled too late, that tidepool can dry out fast.

This stretch isn’t about getting clever. It’s about getting precise. Because when the tide shifts, you want to be prepared--not scrambling with a bucket trying to scoop water back in.

So in today’s episode, we’re walking through five of the most common--and dangerous--mistakes I see people make in the home stretch before retirement. And stick around, because in the second half of this episode, we’ll unpack a surprising risk most people overlook—and how to avoid it with a strategy you can start today. Whether you're five years out or just starting to think about your exit plan, this one’s for you.

Let’s map out the path and kick it off.

Mistake #1: Getting aggressive too late

If I had a dollar for every time someone said, “I need to catch up--so I’m cranking my portfolio back into high gear,” I could fund a few retirements just off that alone.

Here’s the deal: trying to supercharge your investments five years before you need them is like pouring jet fuel into a Toyota Corolla. It might go faster for a second--but it's not built for that kind of heat.

Let’s say you’ve been conservative during your career. Maybe you’ve had 40% stocks, 60% bonds. And suddenly, with retirement looming, you decide it’s time to crank it up to 90% stocks because you “need growth.”

I get the instinct. But let’s run the math.

If your portfolio drops 25% two years before retirement because you shifted into something riskier--how do you feel about sticking to the plan? Are you still going to retire on schedule? Or are you pushing it back another year or two?

This happens all the time.

And let me just say--from one former enlisted Marine to the next ambitious type out there: adrenaline is not a strategy. Not on patrol, and not with your nest egg. A better move? Focus on consistency. Optimize what you can control--like savings rate, tax efficiency, and smart diversification.

Leave the Hail-Mary throws to the guys on Sunday.

Mistake #2: Ignoring the Sequence of Returns

Here’s a retirement killer no one sees coming until it’s too late: sequence risk.

Quick definition--sequence risk is the danger of experiencing poor investment returns right around the time you begin withdrawing from your portfolio.

It’s not just how much your investments earn over time--it’s when they earn it.

Imagine two people with identical portfolios and identical average returns. One retires in a bull market. The other retires into a downturn. Ten years later? Their outcomes look wildly different.

The second person had to sell investments when they were down just to cover basic living costs. That locks in losses. Those dollars don’t have a chance to recover.

Here’s the kicker: most people don’t build a buffer for that.

They go from working full-time to pulling from their investments with no cash reserve, no short-term income plan, and no flexibility.

If you’re five years out, now’s the time to build what I call “shock absorbers.”

A combination of cash reserves, flexible spending plans, and even pre-retirement part-time work can help you avoid yanking money out of your accounts at the worst time.

Think of it like this: you’re wading through the tidepool of retirement planning. The rocks are slippery in that first stretch. Sequence risk is a wave that can knock you down if you’re not anchored.

Don’t let it.

Mistake #3: Overestimating Your Retirement Paycheck

People love to say they’ll spend less in retirement. “We won’t have the mortgage anymore.” “We’ll eat out less.” “We’ll travel cheap.”

Let me tell you something: you won’t.

Okay, maybe that’s harsh. Let me rephrase.

Most people don’t spend way less--especially in their first 10 years of retirement. In fact, many spend more.

You know why? Because retirement starts out as a honeymoon. And honeymoons usually don’t happen in your backyard with sandwiches from home.

You go see the grandkids. You buy the RV. You join that wine club in the Willamette Valley. And you start fixing up the house now that you’re home enough to see what’s falling apart.

The problem is, many retirement plans assume your expenses drop like a rock. But if you still have health insurance premiums, property taxes, gifting goals, and that second car that won’t live forever… your real budget may look a lot like your working one.

Here’s what I tell clients: retirement isn’t a lifestyle change--it’s a funding change. You go from earning income to managing income. So the goal isn’t to cut everything. The goal is to fund the life you actually want.

Build a retirement spending plan that reflects reality, not wishful thinking.

Mistake #4: Waiting Too Long to Deal with Taxes

Ah, taxes. Everyone’s favorite.

Let’s go ahead and say it together: the IRS is not your retirement partner.

This one gets personal for a lot of people. You spend 30+ years building up pre-tax accounts like your 401(k) or traditional IRA. You feel good about deferring taxes.

And then you hit retirement, turn on Social Security, and the IRS shows up with a little smirk and a big calculator.

The last five working years are your final window to make strategic moves--especially if you’re still in your peak earning years but expect a future dip in income.

Here’s the shortlist of things you might want to explore now--not later:

• Roth conversions while you’re in a known tax bracket
   
  • Keep in mind that converting from a traditional IRA to a Roth IRA is a taxable event. Of course, the benefit is that a Roth IRA offers tax free withdrawals on taxable contributions. But remember, to qualify for the tax-free and penalty-free withdrawal or earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 ½ or due to death, disability, or a first time home purchase – that’s up to a $10,000 lifetime maximum. Depending on state law, Roth IRA distributions may be subject to state taxes. Looking at you, Michigan and Mississippi. Wouldn’t recommend retiring in those states if you’ve accumulated Roth IRA money.
•  

Okay, that was a bit of a disclosure tangent. You can thank my compliance later! So, other things on the short list to do now, not later: 

• Accelerating income into a low-tax year
• Spreading out capital gains over multiple years
• Pre-planning RMD strategy to avoid Medicare IRMAA surcharges

This stuff doesn’t happen by accident.

And if you wait until you're 73 and start taking hit from Required Minimum Distributions, your options get a lot more limited. Especially if you're a surviving spouse who inherits everything and suddenly jumps tax brackets. That “Widow Tax Penalty” is very real.

If the words “Roth conversion,” “IRMAA,” or “tax drag” sound like industry jargon--you’re not alone. I try to make is understandable as possible, but sometimes you have to use the term. Clarity on what those terms mean? That’s what advisors are for.

But ignoring taxes is like ignoring the weather forecast before a hike in the Cascades. Just because it’s sunny now doesn’t mean there’s not a storm brewing.

Mistake #5: Leaving Life Planning Out of the Financial Plan

Let’s land the plane with something most advisors skip: your actual life.

I talk to a lot of people who’ve mapped out their investments, pensions, and benefits -- but have no idea what they’re retiring to.

They’ve planned out of work--but not into anything else. And that’s a setup for disappointment, boredom, or even depression.

Here’s a question I’ve begun asking clients within a few years of retirement: 

“What do your Tuesdays look like after you stop working?”

If you can’t answer that--you’re not ready to retire. You might be financially prepared. But not emotionally. Not relationally. Not spiritually.

The best retirement plans are the ones that sync your money with your mission.

If you want to volunteer? Let’s plan for that.
 If you want to travel six weeks a year? We need to fund it.
 If you want to start a side business or mentor younger professionals or spend more time with grandkids--your plan should reflect that.

Retirement is not a finish line. It’s a handoff Iin the relay race. Maybe a better analogy…a little less aligned with the rat race many are trying to escape when they retire: it’s a milestone along the path of life. And this critical window is where you map out where that path is going to take you.

And by the way, “doing nothing” is a choice too--but it usually doesn’t age well.

[Wrap-Up + Action Steps]

Alright, let’s bring it home.

The final five years before retirement are critical. I’m talking red alert, decision-heavy, high-leverage years. But “critical” does not have to mean “stressful.” Those years don’t have to be stressful--if you avoid the landmines.

Let’s take some action on this:

First, review your current investment risk. Are you trying to play catch-up too late in the game?

Next, stress-test your plan for sequence risk and downturns.

Then ,build a retirement budget based on real life, not assumptions.

I’d also strongly suggest getting a tax plan in place now--not after retirement.

And a final action item…more of a thought - start shaping a life plan that gives your retirement purpose.

And if you don’t know where to start--talk to someone. You don’t have to time this tide alone.

And hey--if this podcast has helped you think differently about your retirement, consider subscribing and sharing it with someone else who might be in that critical window too.

Thanks for listening.

Remember, it’s not about having the smartest financial advisor, the most money saved, or the highest probability of retirement success. The perfect retirement plan for you is the one you act on.

It’s disclosure time! This podcast is intended for educational purposes only and should not be used for any other purpose. The views depicted in this material should not be considered specific advice or recommendations for any individual, are not intended to be financial, tax, or legal advice and are not representative of Tidepool Wealth Strategies, Cetera Wealth Services or Cetera Investment Advisers. For a comprehensive review of your personal situation, always consult with a financial, tax or legal advisor. Neither Cetera nor any of its representatives may give legal or tax advice.
 Our office address is 450 Country Club Road Suite 350 Eugene Oregon 97401. Securities offered through Cetera Wealth Services, LLC, member
 FINRA/SIPC. Advisory Services offered through Cetera Investment
 Advisers LLC, a registered investment adviser. Cetera is under
 separate ownership from any other named entity.

Sources:

1. Center for Retirement Research at Boston College – “Do Retirees Want to Consume More, Less, or the Same as They Age?”
    https://crr.bc.edu/do-retirees-want-to-consume-more-less-or-the-same-as-they-age/ 
2. Kiplinger – “How to Avoid the Widow’s Penalty After the Loss of a Spouse”
    https://www.kiplinger.com/retirement/how-to-avoid-the-widows-penalty-after-the-loss-of-a-spouse 

U.S. Bureau of Labor Statistics – Consumer Expenditures by Age Group
 https://www.bls.gov/cex/