The Personal Finance Podcast
Host: Andrew Giancola
Episode: The 7 Biggest Mistakes People Make in Retirement (And How to Avoid them!)
Date: September 10, 2025
Episode Overview
In this episode, host Andrew Giancola breaks down the seven most common and costly mistakes people make when planning and living through retirement. Drawing from research, real-world examples, and his own experiences, Andrew highlights why these pitfalls occur and, more importantly, how listeners can avoid them. The episode is practical, data-driven, and packed with actionable strategies for securing a worry-free retirement.
Key Discussion Points and Insights
1. Overspending Early in Retirement
[Starts 10:50]
- Main Idea: The allure of newfound freedom can lead recent retirees to overspend, especially in the first 5–10 years.
- The 4% rule (from the 1998 Trinity Study) offers a 95%+ chance of retirement success, but increasing withdrawals to 5–6% doubles or triples likelihood of running out of money.
- Early overspending combined with a market decline (sequence of return risk) can devastate a portfolio.
- Retirees often spend even more in the first decade due to bucket-list travel and hobbies.
- Longevity risk is underappreciated; many will live 30+ years in retirement.
“Overspending is that silent killer that can take you out and only allow yourself to increase spending if your portfolio exceeds a set threshold.” — Andrew Giancola [23:24]
How to Avoid:
- Adjust spending based on market performance (dynamic withdrawal strategy).
- Maintain cash reserves (Andrew recommends 3–5 years for peace of mind).
- Divide retirement budget into "essentials," "wants," and "legacy."
- Stress test your plan with tools like Monte Carlo simulations.
- Only increase spending if your portfolio beats targets.
2. Ignoring Health Care Costs in Retirement
[Starts 29:29]
- Healthcare is the second highest expense after housing and rises with age.
- A couple retiring at 65 in 2024 needs $315,000 after-tax for healthcare (excluding long-term care).
- Medicare does not cover everything—dental, vision, hearing aids, and long-term care are excluded.
- Healthcare costs are rising faster than standard inflation (about 5.4–7% yearly).
“This is not to scare you. This is to show you what reality is.” — Andrew Giancola [33:36]
How to Avoid:
- Build substantial healthcare (and long-term care) needs into your retirement number.
- Utilize HSAs (Health Savings Accounts) for triple-tax-advantaged growth if you’re eligible.
- Explore the right Medicare plan: Original, Medigap, or Advantage.
- Consider self-insuring or a hybrid insurance approach for long-term care.
- Use “buckets” (cash, bonds, growth) for healthcare-related expenses.
3. Not Planning for Inflation
[Starts 43:13]
- Even 3% inflation doubles the cost of living every 24 years (rule of 72); healthcare inflation is even higher.
- Retirees need much more money than they estimate if they plan to live 20–30 years.
- Fixed cash or fixed income loses value to inflation, especially over long periods.
“If you stuff your money under a mattress like a drug dealer, your money is going to be worth significantly less in 30 years.” — Andrew Giancola [43:38]
How to Avoid:
- Keep a healthy allocation in stocks; equities outpace inflation long term.
- Consider Treasury Inflation-Protected Securities (TIPS) for fixed-income portions.
- Use dynamic withdrawal strategies—spend less during high inflation years.
- Always factor inflation into your projections. Increase annual contributions and negotiate salary increases at least to inflation.
4. Chasing Returns Too Aggressively
[Starts 56:05]
- The average investor earns almost 3% less annually than the S&P 500 by trying to time the market.
- Volatility is especially dangerous just before and after retirement (sequence of return risk).
- 100% stock portfolios may grow faster but can expose retirees to severe risk if the market sours.
“The goal of retirement is for portfolio longevity. It is not for beating the market.” — Andrew Giancola [1:04:05]
How to Avoid:
- Create a written Investment Policy Statement (document your allocation, risk tolerance, and rebalancing rules).
- Stick with diversification; boring often wins.
- Rebalance annually, especially as retirement nears.
- Focus on preservation and steady growth over maximizing returns.
5. Underestimating Taxes in Retirement
[Starts 1:07:45]
- Withdrawals from 401(k)s and IRAs are taxed as ordinary income, potentially at higher-than-expected rates.
- Up to 85% of Social Security income can be taxable depending on household income.
- Required Minimum Distributions (RMDs) can force withdrawals, leading to higher taxable income, Medicare surcharges, and unexpected bills.
- Where you live matters: some states heavily tax retirement income.
How to Avoid:
- Diversify across pre-tax (401k/IRA), post-tax (Roth), and taxable brokerage accounts.
- Consider Roth conversions in lower income years and spread withdrawals to manage tax brackets.
- Project your RMDs and plan for possible Medicare premium surcharges.
- Consult a CPA or tax strategist.
“Taxes don’t stop when you retire, they just change form.” — Andrew Giancola [1:14:56]
6. Not Having a Withdrawal Plan
[Starts 1:15:35]
- Retirees with a structured withdrawal plan (4% rule, guardrails approach) have a much higher success rate (90%+) versus those who just “wing it.”
- Many focus solely on saving, not on how to actually spend down efficiently and safely.
- Sequence taxes efficiently: generally taxable accounts first, then tax-deferred, then Roth.
How to Avoid:
- Select a withdrawal rule (e.g., start with 4% and use guardrails for adjustments).
- Match withdrawal buckets with time horizons (short-term cash/bonds, intermediate, long-term growth).
- Regularly automate and re-assess withdrawals.
- Align withdrawals with required distributions and Social Security.
- Seek professional guidance for efficient sequencing.
7. Neglecting Estate Planning
[Starts 1:23:17]
- Over two-thirds of Americans lack a will; even among 55+, less than half have estate documents.
- Probate is slow, expensive, and can cost heirs 3–7% of the estate.
- Missing or outdated beneficiaries can send assets to unintended recipients.
“Most retirees risk leaving loved ones with legal and financial messes.” — Andrew Giancola [1:23:45]
How to Avoid:
- Create or update a will or trust.
- Verify and update beneficiaries on all financial accounts every 2–3 years.
- Consider powers of attorney and communicate plans with family.
- Plan ahead for estate taxes and probate.
- For complex situations, consult an estate attorney.
Notable Quotes & Memorable Moments
- “You can learn from mistakes, and they don’t have to be your mistakes.” [07:39]
- “Overspending is that silent killer…” [23:24]
- “This is not to scare you. This is to show you what reality is.” [33:36]
- “If you stuff your money under a mattress like a drug dealer, your money is going to be worth significantly less in 30 years.” [43:38]
- “The goal of retirement is for portfolio longevity. It is not for beating the market.” [1:04:05]
- “Taxes don’t stop when you retire, they just change form.” [1:14:56]
- “Most retirees risk leaving loved ones with legal and financial messes.” [1:23:45]
Timestamps for Important Segments
- 10:50 — Mistake #1: Overspending early in retirement
- 29:29 — Mistake #2: Ignoring health care costs
- 43:13 — Mistake #3: Not planning for inflation
- 56:05 — Mistake #4: Chasing returns too aggressively
- 1:07:45 — Mistake #5: Underestimating taxes in retirement
- 1:15:35 — Mistake #6: Not having a withdrawal plan
- 1:23:17 — Mistake #7: Neglecting estate planning
Final Thoughts
Andrew’s advice throughout the episode is pragmatic and encouraging. He emphasizes planning, flexibility, and the value of learning from others’ mistakes:
“Anyone can be wealthy. I will show you how.” — Andrew Giancola
Listeners are encouraged to join the Master Money newsletter and keep learning—because a rich, stress-free retirement is possible with proper planning and a willingness to keep improving your approach.