Retirement Retirement Planning

10 Money Moves You Shouldn’t Make Until You’re Officially Retired

Jumping the gun on these money moves could hurt your future security.

romantic senior couple at tropical vacation
Updated Nov. 10, 2024
Fact checked

We receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

Retirement is an exciting time, and it’s easy to feel tempted to jump into new plans and start implementing your retirement lifestyle early.

However, the difference between planning for retirement and making big financial changes too soon can be significant.

Major financial decisions that seem wise when nearing retirement may be missteps if retirement is delayed or your needs change.

Here are 10 financial moves you should avoid until your retirement is official.

Earn cash back on everyday purchases with this rare account

Want to earn cash back on your everyday purchases without using a credit card? With the Discover®️ Cashback Debit Checking account (member FDIC), you can earn 1% cash back on up to $3,000 in debit card purchases each month!1

With no credit check to apply and no monthly fees to worry about, you can earn nearly passive income on purchases you’re making anyway — up to an extra $360 a year!

This rare checking account has other great perks too, like access to your paycheck up to 2 days early with Early Pay, no minimum deposit or monthly balance requirements, over 60K fee-free ATMs, and the ability to add cash to your account at Walmart stores nationwide.

Don’t leave money on the table — it only takes minutes to apply and it won’t impact your credit score.

Apply for a Discover Cashback Checking account today

Moving out of state

New Africa/Adobe moving boxes and furniture Van

Many states have varying tax rates, so making a move before you fully understand the tax implications can impact your retirement income.

If you’re still working or haven’t officially retired, moving to a state with a higher tax rate may result in you paying more in taxes than anticipated.

Wait until your retirement income sources are finalized to avoid making mistakes based on an incorrect assumption about your tax situation.

Selling your home

Andy Dean/Adobe For Sale By Owner sign

While you may be eager to downsize or relocate to your dream retirement destination, selling your home too soon can backfire. It’s important to get a sense of your post-retirement lifestyle before making any decisions.

Moving closer to family, warmer climates, or a new town may sound ideal now, but your needs may shift once you retire. Wait until you’ve settled into retirement to make big decisions about your primary residence.

Quitting your job

Lek/Adobe man resigning while packing things

Quitting your job before your retirement is finalized can significantly strain your finances. Until you’re certain of your retirement date and benefits, it’s wise to remain employed.

Often, the last few years of work provide higher earnings that can boost your retirement savings and Social Security benefits.

Additionally, if you leave your job too soon, you may lose access to employer-provided health benefits, which could leave you scrambling for coverage until Medicare kicks in at age 65.

Earn $200 cash rewards bonus with this incredible card

There's a credit card that's making waves with its amazing bonus and benefits. The Wells Fargo Active Cash® Card(Rates and fees) has no annual fee and you can earn $200 after spending $500 in purchases in the first 3 months.

The Active Cash Card puts cash back into your wallet. Cardholders can earn unlimited 2% cash rewards on purchases — easy! That's one of the best cash rewards options available.

This card also offers an intro APR of 0% for 12 months from account opening on purchases and qualifying balance transfers (then 19.74%, 24.74%, or 29.74% Variable). Which is great for someone who wants a break from high interest rates, while still earning rewards.

The best part? There's no annual fee.

Click here to apply now.

Starting a business

Ivan Traimak/Adobe Senior woman at computer

Starting a business before retiring might seem like a productive way to fill your time or create supplemental income, but entrepreneurship is a big financial commitment.

New businesses often take time to become profitable, and there’s no guarantee your venture will succeed. If you dip into retirement savings to fund your startup, you could jeopardize your financial security.

It’s best to maintain a solid safety net and wait until retirement is official before committing substantial funds or taking on business risks.

Paying off your mortgage

Tamani Chithambo/peopleimages.com/Adobe couple computing mortgage payment

Many people dream of entering retirement mortgage-free, but paying off your mortgage too soon could deplete your savings.

Retirement savings are often better left to grow, especially if your mortgage interest rate is low. Paying off the mortgage before retirement might also leave you with less liquidity if unexpected expenses arise.

Before zeroing out your mortgage debt, make sure you can comfortably afford the lump-sum payment and maintain enough funds to cover emergencies.

Making a major purchase

highwaystarz/Adobe Mature Man Polishing Restored Classic Car Outdoors

It’s tempting to make big purchases like buying a vacation home, a new car, or even costly furniture before retiring. However, these expenses can drain your savings, leaving less for essential costs when you’re officially retired.

Additionally, if your retirement date is delayed, you may find yourself still working to pay for purchases that don’t align with your current financial priorities.

Postpone major spending until you have a full picture of your retirement budget and can make decisions without risking financial stability.

Making withdrawals from your retirement fund

thodonal/Adobe Retirement savings concept on tablet

Retirement accounts, like 401(k)s and IRAs, are designed for post-retirement use, and early withdrawals can result in taxes and penalties.

If you tap into your retirement fund before you’re officially retired, you not only pay penalties but also lose out on valuable compounding growth.

Instead, let your savings grow as long as possible and plan your withdrawal strategy with the help of a financial advisor to avoid unnecessary losses and maximize your retirement funds.

Filing for Social Security benefits

Vitalii Vodolazskyi/Adobe Social security benefits form

Filing for Social Security benefits before your retirement is official may seem appealing, especially if you want to supplement your income now. However, claiming benefits early can permanently reduce your monthly payments.

Delaying Social Security benefits can lead to higher monthly payouts and make a significant difference over the long term. 

If you can continue working or tap into other resources in the short term, waiting to claim Social Security can help you maximize your benefits in retirement.

Spending money on tons of leisure activities

Impact Photography/Adobe senior friends playing golf at backyard lawn

While retirement promises more time for leisure, getting a head start on spending for vacations, hobbies, or memberships can quickly add up.

Engaging in these activities without a clear retirement budget can lead to overspending, which might not align with your future income.

Before committing to new expenses, ensure your retirement income will comfortably support your desired lifestyle so you can enjoy leisure without financial stress.

If you’re over 50, take advantage of massive discounts and financial resources

Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.

How to become a member today:

  • Go here, select your free gift, and click “Join Today” 
  • Create your account (important!) by answering a few simple questions 
  • Start enjoying your discounts and perks!

You’ll also get insider info on social security, job listings, caregiving, and retirement planning. And you’ll get access to AARP’s Fraud Watch Network to help you protect your money, as well as tools to help you plan for retirement.

Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.

Become an AARP member now

Excessive traveling

MNStudio/Adobe senior couple enjoying cruise vacation

Many retirees dream of traveling, but embarking on extensive trips before retirement is finalized can be costly. Not only are you tapping into your savings early, but you may also find that a delayed retirement means you have to cut back on these plans later.

Excessive travel spending can also derail any last-minute retirement savings goals. Hold off on any big travel expenses until you’re certain your retirement is secure, and you’ve planned for travel within your budget.

Bottom line

Prostock-studio/Adobe senior couple looking through papers

As you approach retirement, it’s tempting to start spending, investing, and planning for a life of freedom and relaxation. But taking financial action too soon can put your retirement savings, income, and stability at risk.

Are you prepared to make decisions that support a stress-free retirement, or could you hold off on a few choices to protect your future financial security?

Lucrative, Flat-Rate Cash Rewards

5.0
info

Wells Fargo Active Cash® Card

Current Offer

$200 cash rewards bonus after spending $500 in purchases in the first 3 months

Annual Fee

$0

Rewards Rate

Earn unlimited 2% cash rewards on purchases

Benefits and Drawbacks
Card Details