Your final working years are critical for retirement success. Avoid these mistakes to maximize your retirement income and minimize lifetime taxes.
| Mistake | Cost | Description | Impact |
|---|---|---|---|
Late Roth Conversion Planning | $200,000 | Waiting until retirement to start Roth conversions creates unnecessary tax burden. | Strategic conversions in final working years = $200K+ in tax savings over retirement. |
Medicare Enrollment Mistakes | $50,000 | Missing enrollment windows or choosing wrong plan costs thousands annually. | Late enrollment penalties last lifetime. Wrong Medigap plan = $3K-5K/year overpayment. |
No Tax-Efficient Withdrawal Plan | $300,000 | Random withdrawals from wrong accounts increase lifetime tax bill significantly. | Strategic withdrawal order (taxable → tax-deferred → Roth) saves $300K+ in taxes. |
Outdated Estate Plan | $100,000 | Estate plans from 10+ years ago don't reflect current laws or family situation. | Old plans trigger unnecessary estate taxes and family disputes. Update every 3-5 years. |
No Long-Term Care Plan | $150,000 | Assuming Medicare covers long-term care costs $150K+ in unexpected expenses. | Medicare doesn't cover assisted living. 70% chance of needing care. Plan now or pay later. |
Missing ACA Subsidy Opportunity | $100,000 | Retiring before 65 without understanding ACA income limits costs $20K/year. | Managing income below 400% FPL = $15K-25K/year in premium subsidies before Medicare. |
Poor Downsizing Timing | $125,000 | Selling home at wrong time triggers capital gains or loses Section 121 exclusion. | $500K exclusion ($250K single) requires 2 of last 5 years primary residence. Time it right. |
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