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The 3 Biggest Retirement Mistakes We See

The 3 Biggest Retirement Mistakes We See

January 25, 2022

By Rick Hellberg, ChFC®, CLU® and Michael Diaz

If you’re nearing retirement, you may be concerned about your ability to maintain the lifestyle you’ve worked so hard to build. It’s one thing to retire, but it’s a wholly different thing to retire abundantly. It’s the ultimate goal so many of our clients hope to achieve, but what they don’t understand is that the playing field for retirement doesn’t look the same as it did 30 years ago. The rules are different and the terrain is a little rockier, yet we’ve found that many clients (and fellow advisors) apply the same cookie-cutter retirement plans that worked for their parents and grandparents and are surprised when the results are not what they expected. 

Our team understands modern retirement needs. We’ve put together the following guide, taken from PeterAlexander President Rick Hellberg’s book Retire Abundantly, so you can avoid making these three major retirement mistakes.

Mistake #1: Relying on the Three-Legged Retirement Stool

There is a long-held metaphor in the financial industry that the sources of retirement income are similar to a three-legged stool. The three legs in this metaphor, Social Security, pension benefits, and personal savings, are the foundational pillars of a strong retirement; and the loss or reduction of just one can have devastating effects on the overall viability of your plan. 

Each leg in this plan has its own structural flaws, and many clients don’t realize that the three-legged concept as we know it is broken—and probably won’t be fixed by the time they retire. In fact, a recent report suggests that only 7% will retire with all three retirement income sources. (1)

Social Security

The unpredictability and unreliability of the Social Security system has been talked about for many years. In fact, recent estimates suggest that the program will run out of funding by 2034, (2) at which point, if no changes are made, benefit payments may shrink to 78% of what Americans expect. (3)

The issues with the program are systemic and range from persistently low interest rates and collectively longer retirements, to significantly more beneficiaries and not enough workers contributing to the fund. Taken as a whole, these factors indicate that the Social Security system is currently underfunded and not earning enough to pay off its obligations. This means it’s not a reliable source for retirement funding, and definitely shouldn’t be the sole support in your three-legged retirement plan.

Pension Benefits

It used to be that you could work for the same company for 40 years and retire with a pension that would allow you to live comfortably for the rest of your life. Unfortunately, those days have become a thing of the past. Pensions are becoming less and less common as employers have shifted toward other forms of deferred compensation. In fact, only 31% of Americans will retire with pension benefits at all. (4)

If you’re part of the majority of Americans who won’t be able to rely on a pension, the other two legs of your retirement plan will need to compensate. As we have already seen, Social Security is unreliable, meaning the bulk of your retirement funds will have to come from personal savings.

Personal Savings

With the structural issues of the first two legs pretty much out of your control, the last leg is really all you have left: personal savings. This includes 401(k), 403(b) and 457 accounts as well as money held in taxable brokerage accounts and personal savings accounts. Despite the much larger reliance on personal savings as the funding mechanism for retirement, many people are finding it more and more difficult to save as much and as often as they need to in order to retire abundantly. This is due to a number of reasons, including economic upheaval during the pandemic, rising inflation, and confusion about how much to save.

Mistake #2: Relying on Traditional Retirement Planning

Like the traditional three-legged stool metaphor, traditional retirement planning no longer works. It’s a mistake to apply the same old thought processes to modern problems, hoping they’ll still work. Instead, we at PeterAlexander strive to come up with innovative solutions to your retirement questions, helping you retire abundantly despite the challenges. It’s not enough to contribute the minimum amount to your 401(k) and rely on Social Security to cover the rest. It’s also not enough to accept that you have to pay a certain amount in taxes or that only the ultra-wealthy can retire abundantly. With proactive, creative planning, there are always more options.

Mistake #3: Banking on the “Average”

The last retirement mistake we often see is the assumption that your retirement will last as long as the current average. There’s a good chance it will last longer, and if you’ve only saved enough to cover the average retirement length, you could find yourself out of luck in your later years.

The average life expectancy of Americans has been steadily increasing with the advent of modern medicine and technology. Just age 58 in 1930, the average life expectancy reached age 78 in 2020. (5) While it’s important to understand the average, you must also be prepared to live beyond 78, especially considering the population living past age 90 increases every year. (6) With that increase in life span comes an increase in the length of retirement, exacerbating the need for an innovative retirement plan that can function in a modern world.

Are You Making Some of These Mistakes?

If some of these mistakes sound familiar, or if the idea of retiring abundantly sounds out of reach, we would love to hear from you! At PeterAlexander, we have the tools and expertise to help you achieve the retirement you deserve. To find your retirement solution and for a free personalized copy of Rick’s book Retire Abundantly, please contact us at 610.940.1441 or info@peteralexanderinc.com today.

About Rick

Rick Hellberg is president and CEO of PeterAlexander, a financial planning firm founded in 1991. Rick is passionate about providing quality, objective financial solutions so his clients can pursue their financial goals and create the legacy they desire. He strives to equip his clients with comprehensive financial services and advice so they can be empowered to make sound financial decisions. The plans Rick and his team develop help their clients to reduce their taxes, educate their children, fund their retirements, pass their businesses on at fair value, and create programs to attract and retain valuable employees, all so that they can focus on what matters most to them. Rick has a Bachelor’s degree in Liberal Arts from Penn State, along with the Chartered Financial Consultant® (ChFC®) and Chartered Life Underwriter® (CLU®) certifications. He has spent over 40 years working with successful individuals and designs tailored solutions to meet his clients’ unique needs. 

Rick resides in Philadelphia with his lovely wife, Lisa, and their two Shiloh Shepherds, Bentley and Winston. He is also the very proud father of two wonderful young men, Peter and Alex. In 2010, Rick ran for Congress in the 2nd District of Pennsylvania and has stayed active in local politics. To learn more about Rick, connect with him on LinkedIn.

About Michael

Michael Diaz is a financial advisor at PeterAlexander with over 15 years of industry experience. Michael is passionate about helping people overcome financial challenges and avoid potential pitfalls so they can focus their time and energy on the most important things in their life. He spends his days working with successful business owners and families, implementing investment and tax reduction strategies to maximize their wealth. Michael’s goal is to help protect his clients’ financial security, putting them first and helping them navigate every stage in their financial journey. Michael earned his Bachelor of Science in Commerce and Engineering from Drexel University. When he’s not working, you can find Michael traveling, cheering on local sports teams, and exercising outdoors. Michael loves spending time with his wife, Abby, and their baby girl, Monroe. To learn more about Michael, connect with him on LinkedIn.


(1) https://www.nirsonline.org/2020/01/new-report-40-of-older-americans-rely-solely-on-social-security-for-retirement-income/

(2) https://www.cbpp.org/research/social-security/understanding-the-social-security-trust-funds-0

(3) https://www.aarp.org/retirement/social-security/questions-answers/how-much-longer-will-social-security-be-around.html

(4) https://www.personalcapital.com/blog/retirement-planning/average-retirement-income/

(5) https://www.statista.com/statistics/1040079/life-expectancy-united-states-all-time/

(6) https://www.thoughtco.com/living-past-90-in-america-3321510