9 Retirement Mistakes That Can Cost You More Than You Think

For people born in 1960 or later, full retirement age is 67. Starting retirement benefits at 62 can reduce the worker’s benefit by as much as 30%. Waiting beyond full retirement age increases benefits by 8% per year for people born in 1943 or later, up to age 70. For someone born in 1960 or later, claiming at 70 produces 124% of the full-retirement-age benefit.

That makes the decision much bigger than simply asking, “Do I want the money now?”

For example, a hypothetical $2,000 monthly benefit at 67 would be about $1,400 at 62 or $2,480 at 70, before considering future cost-of-living adjustments.

What to do: Before claiming, compare your personalized estimates at different claiming ages through your Social Security account. There isn’t one universally correct claiming age; health, other income, taxes, family circumstances and longevity expectations all matter.

Social Security claiming decisions can affect a surviving spouse.

A survivor benefit can range from 71.5% of the deceased worker’s primary insurance amount when claimed at 60 to as much as 100% at the survivor’s full-retirement age.

There’s an important complication when the higher earner claimed retirement benefits early. Under the survivor rules, the benefit can be limited by the worker’s reduced benefit or by the statutory RIB-LIM formula, which uses 82.5% of the worker’s primary insurance amount as one part of the calculation. If the worker delayed retirement, delayed-retirement credits can also carry into the survivor benefit.

What to do: Couples should consider Social Security as a household decision, especially when one spouse has a substantially larger benefit.

Medicare premiums can depend on your income from two years earlier.

For 2026, the standard Part B premium is $202.90 per month. The first IRMAA tier begins above $109,000 of modified adjusted gross income for an individual or $218,000 for a married couple filing jointly. At that first tier, the Part B premium rises to $284.10. Higher income can push it as high as $689.90 per month. Part D also has income-related surcharges.

That means a large Roth conversion, capital gain or retirement-account distribution can have consequences beyond the tax bill itself.

What to do: If you’re approaching Medicare age or already enrolled, understand the two-year income lookback before making unusually large taxable transactions. If retirement or another qualifying life-changing event substantially reduced your income, Medicare has an appeal process.

The Part B late-enrollment penalty is generally 10% for each full 12-month period you could have had Part B but didn’t. The penalty generally lasts as long as you have Part B.

The important exception involves qualifying coverage through current employment. If you or your spouse are still working and you have qualifying employer group coverage, you may be able to delay Part B and later use an eight-month Special Enrollment Period.

COBRA and retiree coverage are different. Medicare specifically says they don’t count as current-employment coverage for this Special Enrollment Period.

What to do: Don’t assume that “I have insurance” means you can safely postpone Medicare. Find out exactly what type of coverage you have before passing your enrollment deadline.

Medicare Advantage plans can offer different premiums, networks and benefits. But prior authorization can become important when you’re seeking certain services.

KFF found that Medicare Advantage insurers made 52.8 million prior-authorization determinations in 2024 and denied 4.1 million, or 7.7%, either fully or partially.

There is also evidence that appeals can change outcomes. An earlier HHS Inspector General review found that Medicare Advantage organizations overturned 75% of their own appealed denials during 2014–2016. That study is older, however, so it shouldn’t be treated as a current 2026 overturn rate.

What to do: Don’t compare Medicare Advantage plans only by premium or extra benefits. Look at networks, covered services, prior-authorization requirements and the plan’s appeal process.

Medicare generally does not pay for long-term custodial care. It can cover certain short-term skilled nursing services when eligibility requirements are met, but that’s different from paying for ongoing assistance with everyday activities.

CareScout’s 2025 national medians were $129,575 a year for a private nursing-home room, $114,975 for a semi-private room, $74,400 for assisted living and $80,080 for 44 hours a week of non-medical in-home care.

The Administration for Community Living estimates that someone turning 65 today has almost a 70% chance of needing some type of long-term care, although one-third may never need it and needs vary enormously.

What to do: Learn what long-term care actually costs where you live and understand which expenses Medicare, Medicaid, insurance and personal savings could cover.

Sequence-of-returns risk is one of those concepts that sounds technical until you see what it can do.

Kitces illustrated the difference using two otherwise identical $1 million portfolios invested 60/40 and withdrawing 4% annually, adjusted for inflation. One retiree began at the end of 1973; another waited until the end of 1975. After 30 years, the historical outcomes were approximately $278,000 versus $3.36 million.

That is a historical illustration, not a prediction. Its point is that the order of investment returns can matter enormously when you’re withdrawing money.

What to do: Consider whether your retirement spending plan can adapt during a severe downturn rather than assuming spending will remain identical every year.

Small differences in investment fees can compound for decades.

The Department of Labor provides a striking illustration: with a $25,000 balance, 35 years to retirement and a 7% average investment return, reducing returns by 0.5% in fees produced a projected $227,000 balance. At 1.5% in fees, the balance was $163,000—a 28% reduction from the additional 1% in annual fees.

Your actual result would depend on returns, contributions, fees and time.

What to do: Find the fee disclosure for every old retirement account you own. Don’t assume a former employer’s plan is inexpensive simply because it is a large company—or expensive simply because it is a small one.

Required minimum distributions generally begin at age 73 for people subject to the current rules. If you take less than your required amount, the IRS generally imposes an additional tax of 25% on the shortfall, potentially reduced to 10% if the correction requirements are met within the applicable correction window.

There’s another trap at the other end of retirement planning: taking taxable retirement money before age 59½. The IRS generally applies a 10% additional tax to taxable early distributions unless an exception applies.

What to do: Keep a list of every retirement account and its RMD requirements. And before taking money early, check whether an exception applies.

None of these decisions exists in isolation.

Social Security affects household income. Income can affect Medicare premiums. Retirement-account withdrawals can affect taxes and IRMAA. Investment fees compound over time. And long-term care can introduce expenses that Medicare generally doesn’t cover.

That’s why the most expensive retirement mistake may simply be making an important decision without understanding what it connects to.

You don’t need to become a retirement expert.

But before making a decision that could affect your income or healthcare for years, find out what the decision changes—and what else it might affect.