I Asked ChatGPT: What Are the Worst Retirement Mistakes People Make?
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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Retirement planning can be confusing at best and overwhelming at worst. When people try to plan for their golden years without professional advice, it’s easy to make mistakes that can cost you both time and money later on.
To get a sense of what some of the worst — in other words, most costly — mistakes people make in their retirement planning, I asked ChatGPT to help aggregate the information so you, hopefully, can avoid making these same errors.
Claiming Social Security Too Early
If you’re ready to retire before full retirement age, you can start taking your benefits and lock in a smaller check for life, ChatGPT pointed out, drawing on data from the Social Security Administration. However, every year you delay your benefits up to age 70, you earn 8% more each year until you hit the cap. This might require some budgeting changes to make sure you can live on your income until Social Security, but you’ll be glad you did later on.
Ignoring Taxes on Social Security
If Social Security is not your only income in retirement, the AI pointed out that you run the risk of being taxed on up to 85% of benefits depending on your tax bracket. Be careful to work with a financial advisor to manage your withdrawals and capital gains to keep your income below the taxable thresholds.
Blowing (or Misunderstanding) RMDs
If you fail to start taking required minimum distributions (RMDs) by age 73 from your tax-advantaged retirement accounts, you will pay an excise tax. Set up automatic withdrawals to take the guess work out of it and work with a financial advisor to determine the best amount to take.
Missing Medicare Enrollment Windows
Missing your Medicare enrollment isn’t just a problem of delaying your health insurance — Part B penalties can add 10% for each full 12-month period you delayed (generally for life) and raise monthly costs, ChatGPT warned. Be sure to stay abreast of enrollment windows and visit the Medicare website for basic info.
Triggering IRMAA Taxes
Big one-time gains (like from selling investments), clustering your RMDs or converting a lot into a Roth can push your income high enough that Medicare charges you extra (Part B/Part D), known as Income-Related Monthly Adjustment (IRMAA), ChatGPT said, drawing on IRS and Medicare information. Instead, try to spread those income-spikes across multiple years. And if you’ve had a major change in your income (such as job loss, retirement, loss of pension, etc.), you can file form SSA-44 with Social Security to ask them to recalculate your Medicare surcharge.
Underestimating Health and Long-Term Care Costs
In your younger, healthier years, it’s easy to assume your healthcare needs will be approximate to what you’re paying now, however that’s often not the case. ChatGPT pointed out that most people will need some form of paid long-term care, and that does not come cheaply. Not planning for this can mean an expensive scramble when you or your loved ones least need to be doing so.
Having Too Much (or Too Little) Stock Exposure
The AI warned that “over-conservative portfolios” may not keep up with inflation while “over-aggressive ones” could put your investments in too much risk right before or after retirement, when you need it most. Be sure you’ve got a diversified portfolio that’s tied to your risk tolerance. Revisit this annually.
Cashing Out a 401(k) When Changing Jobs
If you leave a job before full retirement age and decide to cash out your 401(k) instead of rolling it over, you can suffer several costly problems. First, you may pay the 10% penalty fee if you’re younger than 59½ (with some exceptions) and you lose the tax-advantaged power of compounding interest. It’s safer to roll your new plan into another retirement account.
Ignoring Catch-Up and New SECURE 2.0 Act Rules
Adults ages 50 and older can make catch-up contributions, and in 2025 those who are ages 60 to 63 get a higher catch-up limit, the AI explained. Pretax catch-ups can lower taxable income; Roth catch-ups don’t — and for high earners catch-ups must be Roth starting in 2026.
Forgetting Housing Blind Spots
You may have paid off a mortgage by retirement, but some forget to account for costs such as property taxes, maintenance and even the cost of downsizing or relocating. Be sure to plan for housing and moving costs in advance.
To avoid making costly mistakes, plan the big levers — benefits timing, tax-smart withdrawals and realistic costs — and you’ll keep more of your money working for you throughout retirement.
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