With just a few twists and turns, retirement plans can get scary – fast. While many Americans look forward to having more free time after their working years, some find themselves in a gloomy situation they weren’t expecting. Overspending, a lack of planning and financial missteps can quickly make the retirement dream a nightmare.

Avoid becoming a retirement horror story by staying clear of these common pitfalls:

1. Not saving enough for retirement
2. Making too many withdrawals during your early retirement years
3. Starting retirement too early
4. Generating a high tax bill that erodes spending
5. Relying too much on Social Security
6. Helping too many family members
7. Focusing on financials but overlooking emotions
8. Making random and risky investments

1. Not saving enough for retirement

About 1 in every 5 Americans age 50 and older have no retirement savings and more than half are concerned they won’t have enough to last through retirement, according to a recent AARP survey. Of course, unexpected life circumstances can make it difficult or impossible to save money for retirement. But without adequate savings, you may have to work during retirement to keep your income stable.

2. Making too many withdrawals during your early retirement years

Once you step away from the workforce, you can find plenty of activities to fill your time. If you're not careful, the savings you’ve accumulated over decades could dissipate. While a spirit of adventure is healthy, you may need to slow the pace of travel plans. You could plan for one major trip each year or prioritize your bucket list and check off items as your budget allows. This strategy can preserve your savings and help you find enjoyment, too.

3. Starting retirement too early

The best age to retire depends on your goals, health and financial situation. However, if you decide to retire in your late 50s or early 60s, you could find a long list of unexpected costs. Your employer may have covered your health care insurance during your working years. If you retire before age 65, you’ll have to wait until you are eligible for Medicare coverage and purchase insurance on your own, which can get pricey fast.

"Clients seeking early retirement face a greater risk of outliving their savings," said Katie Lindquist, a certified financial planner and owner of Lindenwood Financial LLC in Madison, Wisconsin, in an email. "To help reduce this risk and have a stronger overall financial plan, you can use a longer retirement timeline than you think you need when estimating how long your assets will need to last."

4. Generating a high tax bill that erodes spending

According to J. Barry Watts, founder and CEO of WealthCare Corporation in Springfield, Missouri, “the biggest risk retirees face is tax rate risk.”

“Tax rates are set to increase in 2026 due to expiring tax provisions in the Tax Cuts and Jobs Act of 2017, so if you are married and making $150,000 per year, your tax rate will increase by 13.6%,” he said in an email. This could impact your budget and spending power.

“If you haven’t retired yet, shift your savings into tax-free accounts to lower your tax risk,” Watts said. This could include Roth IRAs, Roth 401(k)s or a Roth conversion. The strategy could help you avoid higher taxes in the future when you’ll be on a fixed income. “While you pay taxes upfront on these dollars, your funds will grow tax-free and can be withdrawn tax-free in retirement,” Watts said.

5. Relying too much on Social Security

You can start claiming Social Security benefits as early as age 62, but carefully consider the pros and cons. Waiting until your full retirement age will lead to a full benefit amount. That figure increases every year until you turn 70.

Still, planning to have Social Security paychecks support you in retirement might lead to unfortunate surprises. The average monthly benefit was $1,921 in August 2024. You may need to find part-time work if you don't have savings to cover your living expenses.

6. Helping too many family members

Looking at the nest egg you’ve built over the years, it may seem you have enough funds to support more than just your household. Be aware that others could view your savings as a source of funds. If you’ve done well at setting aside money to last for many years, don’t be surprised if others request a loan or financial help. You might be asked to help grandchildren pay for their college education or to provide the money for adult children to make a down payment on a house.

Before sharing funds with others, it can be helpful to review your budget. “Make sure to live in a way that doesn’t use up your savings too fast,” said Celeste Robertson, an estate planning attorney in Corpus Christi, Texas, in an email. “Be careful about giving away too much money, even to your family.”

7. Focusing on financials but overlooking emotions

If you devote all your energy to numbers but neglect your mental and emotional well-being, you could feel downcast in retirement. “While the financial aspect is obviously key, I also discuss with my clients the emotional, social and psychological aspects, which can be just as important,” Lindquist said. She shares a tiered framework with her clients created by Riley Moynes, author of “The Four Phases of Retirement: What to Expect When You’re Retiring.” These phases consist of vacation time, unavoidable losses, experimenting and embracing life.

8. Making random and risky investments

If you get calls from strangers offering you great investment opportunities, proceed with caution. Putting large sums of your savings into a partnership or stock that promises to yield great returns could end in disaster. Scam artists regularly swarm retirees, as thieves know there are often savings to tap. “Keep your saved money in safe places, like certain kinds of bank accounts or investments that aren’t too risky so you don’t lose it,” Robertson said.