Forgetting to take required minimum distributions. Withdrawals from 401(k)s and IRAs become required after age 70½. People who fail to withdraw the correct amount will face a 50 percent tax penalty in additional to the regular income tax due on the amount that should have been withdrawn.
[See 10 Great Senior Discounts.]
Spending too much on travel and new hobbies. Some expenses will decrease in retirement, such as commuting costs and workplace attire. But new costs may take their place or even surpass them. Travel costs can become a huge new retirement expense, and some new hobbies might also come with significant costs. Some retirees end up spending more on entertainment simply because they now have more time for it. You may find yourself dining out more to get out of the house or connect with other people. "When you have time on your hands, most people are fairly creative in finding ways to spend money. They play more golf and they go see the grandkids more often," says Seaton. "Find out how you want to spend your time in retirement, and find out what it's going to cost you."