After a lifetime of planning and saving, you’re finally on the verge of retirement. However, retirement planning doesn’t stop just because you’re beginning to draw income from your investments.

As you embark on this exciting new chapter of your life, keep your retirement goals on track by avoiding these common pitfalls:


1. Claiming Social Security Too Early

It may be tempting to apply for Social Security benefits when you’re first eligible at age 62. But doing so may be costly.

Choosing to receive your benefits before your full retirement age (which varies depending on the year you were born but is around 66 for most people nearing retirement) could reduce your monthly benefit by 25 percent or more.

And if you continue working, for every $2 you earn above a specific threshold — $17,040 in 2018, $17,640 in 2019 — your benefit is withheld by $1 until you reach full retirement age.1

Conversely, for every year you wait to claim benefits beyond full retirement age, the benefit you receive increases by 8 percent annually until age 70.2 So, unless you really need the money, you may want to consider waiting to apply.


2. Taking on Too Much Risk

When time is on your side, you may be able to afford to take on riskier investments for greater growth.

As you begin retirement, however, the assets you’ve accumulated to meet your day-to-day expenses become harder to recoup if you suffer an investment loss. So, it’s important to make sure you’re not taking on too much risk.

But as retirement can last a very long time, you may want to consider maintaining some exposure to stocks, especially in the early years of your retirement.


3. Spending Too Much

The assets you have accumulated over a lifetime may seem like an enormous financial resource you can tap into whenever you like. However, those investments may need to last 30 years or more.

Create a list of all your likely expenses, compare it against your income sources, and develop a spending strategy to help you maintain your retirement lifestyle for as long as possible.


4. Miscalculating Required Minimum Distributions

Generally, once you reach age 70.5, you must take annual distributions — called required minimum distributions (RMDs) — from your 401(k), IRA, or other qualified plan, whether you need the money or not. (Roth IRAs and some employer-sponsored qualified retirement plan investors are exempt from this requirement.3)

Properly planning your minimum distributions is essential. They are usually taxable at your individual tax rate, and failure to take them could subject you to a penalty — 50 percent of the RMD or whatever portion of it you neglected to take.

Given the complexity of the requirement and the potential for penalties, it’s a good idea to seek RMD guidance from your accountant or tax adviser.


5. Ignoring Healthcare Expenses

Overlooking healthcare costs is another area where retirees can face unwelcome surprises.

A 2017 survey by the Nationwide Retirement Institute found that health issues often happened sooner than retirees expected and interfered with their ability to afford to do the things they want to do.4

A couple with high prescription-drug expenses throughout retirement could need roughly $350,000 in savings to have a 90 percent chance of having enough money saved to cover their healthcare costs, according to the Employee Benefit Research Institute.5

Long-term care insurance can help protect and preserve assets meant for your loved ones, while relieving them of fulltime caregiving responsibilities by providing more options for your care.


With many options available and decisions to make as you navigate this important milestone, a financial adviser who is familiar with your individual circumstances can help you create a strategy tailored to your goals and the retirement you envision.


Steven Brettler is a financial adviser and branch manager with Morgan Stanley in Greenville, Del. He may be reached at (302) 573-4027 or




1 Social Security Administration Fact Sheet, “2019 Social Security Changes.” Retrieved from:

2 Social Security Administration Benefits Planner: Retirement, Increase for Delayed Retirement section. Retrieved from:

3 Note: If you are still working for a company where you hold a workplace retirement plan and you don’t own more than 5 percent of the company, you may be able to delay your required distribution date to April 1 of the year following the year you retire.


4 Nationwide Retirement Institute, “The Nationwide Retirement Institute Consumer Social Security PR Study 2017,” August 2017. Retrieved from:


5 Employee Benefits Research Institute, “Savings Medicare Beneficiaries Need for Health Expenses: Some Couples Could Need as Much as $350,000” January 2017. Retrieved from:



Article by Morgan Stanley and provided courtesy of Morgan Stanley Financial Advisor.


Steven Brettler is a Financial Advisor in Greenville, DE, at Morgan Stanley Smith Barney LLC (“Morgan Stanley. He can be reached by email at or by telephone at (302) 573-4027. His website is


This article has been prepared for informational purposes only. The information and data in the article has been obtained from sources outside of Morgan Stanley. Morgan Stanley makes no representations or guarantees as to the accuracy or completeness of the information or data from sources outside of Morgan Stanley. It does not provide individually tailored investment advice and has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this article may not be suitable for all investors. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.


Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors or Private Wealth Advisors do not provide tax or legal advice. Individuals are urged to consult their personal tax or legal advisors to understand the tax and legal consequences of any actions, including any implementation of any strategies or investments described herein.


Steven Brettler may only transact business, follow-up with individualized responses, or render personalized investment advice for compensation in states where he is registered or excluded or exempted from registration.



© 2018 Morgan Stanley Smith Barney LLC. Member SIPC. CRC 2300657 11/2018

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