7 Retirement “Rules” Financial Advisors Say You Should Break in 2025

For the entirety of your career, you've heard the so-called rules of retirement. Save a certain percentage, retire at a specific age, and follow a regimented withdrawal plan. However, financial experts agree that the retirement rulebook was written at a very different time and doesn't always set you up for a stress-free retirement.

"The old retirement rules were centered around a time when people generally had supplemental income, such as pensions, and lived shorter lives," said Gina Stoddard, the chief of staff at Broad Financial. "These rules no longer fit into the long-term retirement planning of the next generations."

In addition to the changing times, new legislation, such as the SECURE 2.0 Act, has altered the approach to retirement planning, further invalidating traditional rules. With that in mind, here are seven pieces of advice you should no longer follow — and what you should do instead.

The premise is simple: withdraw 4% of your portfolio in the first year of retirement, then adjust subsequent withdrawals for inflation. Since the 1990s, many financial planners have embraced the 4% rule due to its safety and practicality. However, even the adviser credited with creating this plan sees it differently now.

Aaron Brask, principal at Aaron Brask Capital, says, "Bill Bengen's original research produced what many of us refer to as the 4% rule. He has since updated his rule to account for a more diversified portfolio and has increased the safe withdrawal rate to 4.7%."

"However, it is important to understand that these figures are based on the worst-case scenarios over the last century," Brask said.

Today, most financial experts advocate for a flexible withdrawal strategy rather than adhering to specific figures, such as 4% or 4.7%.

One of the cornerstones of retirement strategy has always been to save as much as possible. However, the fear of running out of money can lead many retirees to adopt an extreme scarcity mindset.

"Academic studies show that the fear of running out of money leads to many retirees underspending in retirement," Brask said.

The goal of retirement shouldn't be to die with the largest possible nest egg but to fund a fulfilling life. That's doable — if you understand what you can spend and the impact it will have on your retirement portfolio.

"While nobody has a crystal ball and can prescribe precise figures, I find that retirees appreciate understanding what ranges of spending could jeopardize their financial security down the road," Brask said. "I am always happy when I can tell clients that they can loosen the purse strings without putting themselves at risk of prematurely depleting their savings."

The conventional wisdom on Social Security has been to wait as long as possible to claim your benefits, ideally until age 70. The logic is sound: For every year you delay past your full retirement age (typically 67), your monthly check increases by about 8%, and that higher benefit is locked in for life and adjusted for inflation.

For a healthy individual with an average or longer life expectancy, this strategy typically yields the largest total lifetime payout. However, many advisors now say treating this as a universal rule is a mistake.

The decision of when to claim should be based on personal factors. For some, claiming early at 62 is the right move, particularly for those in poor health or with a shorter life expectancy. For others, some point between 62 and 70 will make more sense.

Another common belief is that there's a magic number that unlocks retirement. Often, that figure is $1 million, a savings target that signals you can enjoy your golden years with confidence. Now, financial advisors find this rule to have little value in today's world.

"The idea that you need $1 million to retire comfortably can be considered an outdated and oversimplified concept," Stoddard said.

"This arbitrary number ignores differences in geography, cost of living, and lifestyle choices," says Liam Hunt, the director of research at Income Insider.

"A retiree in rural Oklahoma might retire comfortably on $500,000, but a couple million would be tight in San Francisco," Hunt said. "Instead of focusing on some magical number, concentrate on covering 100% of your actual retirement expenses. With your mortgage paid off and children independent, living costs might be $50,000 per year. Build a financial strategy that lets you hit that income level sustainably."

Many people associate retirement with being debt-free. At a minimum, we're told we should have our home paid off. But many financial advisors point out that tying up a big chunk of your savings in home equity is not always the wisest move.

The tax deduction on mortgage interest can help offset the tax burden from other retirement income. In addition, advisors generally warn against withdrawing money from a tax-advantaged retirement account like an IRA or 401(k) to pay off a mortgage, as such a move can put you in a higher tax bracket.

For years, annuities have had a bad reputation. They're often dismissed as complex, high-fee products that primarily benefit the person selling them. While that may be true in some cases, some annuity products can be a good fit for a particular kind of retiree.

Jay Zigmont, PhD, CFP, the founder of Childfree Trust, says, "Annuities tend to work best for people who are nervous and want a guaranteed income."

The way some advisors see it, immediate or deferred guaranteed income annuities can act as a replacement for the pensions that most companies no longer offer.

Age 65 has long been considered the traditional retirement age. However, with more people working and living longer, most experts now view retirement as a gradual transition rather than an event that occurs after a specific birthday.

"Age may be one of the least important factors in retirement," Zigmont said. "Just because you hit 65 doesn't mean you are ready to retire, and you don't have to wait until 65 to retire. You can retire when you can live off of your investments."

In addition, SECURE 2.0 (which has many provisions taking effect in 2025) allows you to make "super catch-up contributions" to your 401(k) and other retirement plans from age 60 to 63, providing a powerful incentive to stay in the workforce longer.

A Gallup poll found that three out of four retired Americans are "pleasantly surprised" with their finances and comfort of living. Part of the reason for their unexpected satisfaction is that they were told preparing for retirement is difficult.

If they weren't able to follow the old-school rules as they prepared for retirement, they feared the worst. However, those old standbys don't necessarily apply today. 

In fact, you're probably better off breaking many of those rules and tailoring your retirement plan to your specific situation — and even exploring whether you can see if you can retire sooner than you originally thought.