Avoiding Retirement Pitfalls
With more assets at stake, high net-worth households face unique risks when it comes to retirement planning. Seemingly small missteps can quickly escalate, impacting both your lifestyle and your legacy. Below, we outline several of the most common—and costly—retirement mistakes, along with practical actions you can take now to sidestep them.
Summary of Common Retirement Pitfalls
| Mistake | Potential Impact | Action Step |
|---|---|---|
| Underestimating Long-Term Care Costs | Rapid depletion of assets, tax surprises, forced Medicaid spend-down | Consider LTC insurance or policies with living benefits; review care needs early |
| Insufficient Liability & Asset Protection | Exposure to lawsuits, large settlements, or uncovered claims | Review umbrella/excess liability coverage; conduct a personal risk audit |
| Lack of Lifestyle & Spending Plan | Overspending, budget shortfalls, emotional stress | Create a lifestyle strategy; categorize essential vs. discretionary spending |
| Creating a Tax “Time Bomb” | Heavy tax bills on withdrawals; complicated estate/tax planning | Diversify tax buckets (Roth, insurance, after-tax savings); coordinate with CPA |
| Not Planning for Parent Support | Unexpected drain on resources, increased stress | Review family coverage; discuss care/insurance options with parents |
| No Integrated Estate Plan | Assets tied up in probate, misaligned wealth transfer | Sync estate and retirement plan; review beneficiaries and legacy goals |
Common Retirement Planning Mistakes by High Net-Worth Households
Action: Consider solutions like long-term care insurance, hybrid life insurance with living benefits, or other strategies to address healthcare and care costs. These options can help protect your assets and your family’s financial future.
Many are surprised by the true cost of healthcare in retirement. According to Fidelity’s 2025 estimate, a couple retiring at age 65 may need over $315,000 to cover healthcare expenses—including premiums, copays, deductibles, and prescription costs—assuming both have traditional Medicare and average longevity.
What’s not included in that estimate? Long-term care, such as nursing home or assisted living, is extra—and 70% of Americans over 65 will need some form of long-term care, according to the U.S. Department of Health & Human Services.
| National Average Long-Term Care Costs (2025) | Monthly Cost |
|---|---|
| Semi-private room, nursing home | $8,100 |
| Private room, nursing home | $9,000 |
| Assisted living facility | $4,700 |
Source: Genworth 2025 Cost of Care Survey (estimates rounded for clarity). Check your state’s median cost.
Action: Complete a liability and asset protection review. Foxcove Financial can help you evaluate coverage options and coordinate with your other professionals to ensure your wealth is properly shielded.
Simply having car and homeowners’ insurance may not be enough for high-net-worth families. As assets grow, so does the risk of lawsuits or claims that exceed standard policy limits. According to national research, while only 20% of those with $1 million net worth worry about being sued, the fear jumps to 80% among those with $20 million or more.
Umbrella insurance, also called excess liability coverage, provides an extra layer of protection beyond your other policies. It can cover lawsuits, personal liability, and some claims not covered elsewhere.
- Property owners
- Business owners
- Those with significant savings/assets
- Owners of risk-prone items (pools, trampolines, certain dogs)
- Non-profit board members or volunteers
- Landlords
- Coaches or participants in risk-related activities (sports, hunting, etc.)
Action: Develop a detailed lifestyle plan for retirement, outlining how you’ll spend your time, what activities are meaningful, and which expenses are “must-haves” versus “nice-to-haves.” Consider travel, hobbies, family, philanthropy, and personal growth as part of your ongoing retirement vision.
Leaving behind a demanding business or executive career often brings more “free time”—but for many, the loss of daily purpose or structure can create unexpected emotional and financial challenges. This transition may even lead to overspending, as retirees try to fill the void or pursue new passions.
Your plan should also address inflation, ensuring your income will keep pace with rising costs, and clearly separate guaranteed income (like pensions or annuities) from variable sources.
| Expense Category | Description | Examples |
|---|---|---|
| Must-Haves | Essential monthly costs | Housing, food, utilities, insurance, healthcare |
| Good-to-Haves | Occasional but planned lifestyle costs | Travel, dining, club dues, seasonal spending |
| Nice-to-Haves | Long-term aspirations and luxuries | Vacation homes, major gifts, once-in-a-lifetime trips |
Action: With support from Foxcove Financial and your CPA, review your account mix. Diversify with Roth accounts, after-tax savings, or life insurance solutions that may provide tax-free income. Plan for RMDs and evaluate strategies to minimize your future tax burden and simplify estate planning.
For high net-worth households used to living well, concentrating too much wealth in tax-deferred retirement accounts can create significant tax challenges down the road. Withdrawals from these accounts are taxed as ordinary income, and high balances can push you into higher tax brackets, especially when required minimum distributions (RMDs) begin at age 73 (as of 2025).
The tax impact also varies widely by state—some states have no income tax, some exempt retirement income, and others treat Social Security and pension income differently. The patchwork of state and federal rules can complicate your planning and create a true “tax time bomb” if left unaddressed.
Action: Open a conversation with your parents about their retirement and insurance planning. Confirm their coverage is current and adequate. Foxcove Financial can connect your family with resources and strategies to protect everyone’s financial security.
As Americans live longer, more retirees are finding themselves supporting aging parents. According to TD Ameritrade, 25% of baby boomers support another adult, often paying for living expenses or medical bills—sometimes averaging $12,000 per year.
Ideally, your parents will have their own retirement and healthcare coverage. If not, review their insurance and long-term care options. Newer life insurance products may offer living benefit riders to help cover personal care needs.
Action: Meet with Foxcove Financial to review your retirement and estate plans. Update or create your will, trust, and beneficiary designations. Foxcove can coordinate with estate attorneys or legacy planners to help you minimize tax burdens and ensure your wealth passes according to your wishes.
- Allow you to control your assets as long as possible
- Protect you and loved ones if incapacitated
- Distribute assets according to your wishes
Your retirement plan should also address questions such as: Will you have enough to support your lifestyle? Are you prepared for health care surprises? What are your goals for legacy and wealth transfer?
Ready for Personal Guidance?
While no strategy can prevent every pitfall, many retirement mistakes can be managed—or avoided—with thoughtful planning. Foxcove Financial specializes in helping high-net-worth households safeguard their wealth, manage insurance-based retirement strategies, and prepare for the complexities of later life. For questions about your personal tax situation, be sure to consult your CPA.
Looking for Guidance?
If you’re ready to take the next step in planning your retirement with confidence, Foxcove Financial is here to help. We’ll walk you through your options, answer your questions, and help you evaluate solutions that align with your long-term goals. We specialize in insured strategies designed to protect and grow your retirement income. Call us at 609.807.8502 or schedule an appointment.