This Is How You Can Avoid a Common Retirement Mistake

This four-pronged plan can guide you as you shift from tax diversification in the early years of retirement to risk management, reliable income creation and intentional legacy planning later in life.

By Leslie Verkuilen, Investment Adviser Representative

last updated 1 May 2026

in Features

A couple look over paperwork together on their living room sofa.

One of the biggest retirement planning mistakes people make is trying to use the same strategy throughout every stage of life.

The reality is, what works in your 40s likely won't work in your 60s. As life changes, your retirement planning approach should, too.

Breaking retirement planning into four distinct phases can help bring clarity to what matters most — and when.

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1. The accumulation phase

This phase is all about building. You're working, earning income and setting money aside for the future.

But here's where many people fall short: They either aren't saving enough, or they're putting everything into one bucket — usually a traditional 401(k).

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The author of this article is a participant in Kiplinger's Adviser Intel program, a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

While 401(k)s are a great tool, relying on them alone can create challenges later, especially since withdrawals are fully taxable. Many employers now offer a Roth 401(k) option, which allows you to contribute after-tax dollars and take tax-free withdrawals in retirement.

Having a mix of pretax and after-tax savings can give you much more flexibility when it comes time to create income.

You can also consider additional vehicles like Roth IRAs or brokerage accounts to further diversify your tax exposure.

If you're self-employed, you may have even more opportunities — like SEP IRAs, solo 401(k)s or defined benefit plans.

The key in this phase isn't just how much you save — it's where you save it.

2. The planning and preservation phase

As you get closer to retirement, the focus starts to shift. Now it's not just about building wealth — it's about protecting it.

Too many people ride the market roller coaster right up to retirement, hoping things work out. But a major downturn in the final years before retirement can significantly impact your future.

This is where risk management becomes critical.

But preservation isn't just about reducing risk — it's also about building a plan.

That includes:

Creating a year-by-year income strategy
Planning for taxes and inflation
Preparing for health care costs
Accounting for required minimum distributions (RMDs)
Setting aside funds for unexpected expenses

It's also the time to consider protection strategies for long-term care and ensuring a surviving spouse is financially secure.

3. The distribution phase

This is retirement — the phase you have been saving your whole life for. Now the focus shifts to turning your savings into a reliable income stream.

At this stage, continuing to manage risk is important, but so is how you withdraw your money.

You don't want to be forced to pull funds from market-based accounts during a downturn. That's why having a portion of your assets in more stable vehicles can make a big difference.

These funds can act as a buffer for unexpected expenses or market volatility.

The goal here is simple: Create a steady, dependable "paycheck" in retirement — without unnecessary risk.

4. The legacy phase

For many people, leaving something behind for your family is important — but it shouldn't come at the expense of your own security.

Your first priority should always be making sure you don't run out of money.

That said, how you leave money matters.

For example, traditional IRA assets passed to non-spouse beneficiaries can create a tax burden. On the other hand, Roth IRAs can offer tax-free distributions if certain conditions are met.

Other tools — like annuities, stocks with a step-up in basis or life insurance — can also play a role, each with different advantages, depending on your goals.

The key is being intentional. A well-structured plan can help you leave a meaningful legacy without creating unnecessary complications for your loved ones.

Dan Dunkin contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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My journey into financial services was deeply personal — shaped by the emotional, physical and financial toll of Alzheimer's and premature death in my own family. I know firsthand the consequences of failing to plan, which is why I've dedicated my career to helping others avoid those same hardships. As a Financial Services Professional with over two decades of experience, my mission is to equip individuals, families and business owners to take control of their financial futures through sensible planning. As the creator of the InPower planning process — a holistic approach designed to encompass all aspects of planning — we can ensure your strategy isn't just built for today, but for the long haul.