Avoiding the big retirement mistakes

By Mark Seed, myownadvisor

Special to Financial Independence Hub

In a few posts on my site over the years, I’ve shared some big retirement mistakes to avoid. This becomes even more important now that we’re entering a new chapter in our lives: semi-retirement / work on own terms.

Are we ready? Can we avoid some big investing and related retirement mistakes that experts share?

In that spirit as part of new pillar post I hope to update annually and anchor my progress around, here are some of the ways I hope to avoid some big retirement mistakes.

I certainly won’t be perfect but I’ll do my best based on this infographic and more below:

Attribution/thanks to Visual Capitalist. @VisualCap

1. Expecting too much

I believe I/we have reasonable long-term return and inflation assumptions. Our projections include at the time of this post:

• 5% annualized returns from a 90% equity/stock + 10% cash/cash equivalents portfolio (excluding my small workplace pension), and
• 3% sustained inflation. 
• Some go-go spending years from now until age 79/80 give or take.

I’ll link to my latest Financial Independence Budget update at the end of this post to support any planning assumptions you might have.

What are your key assumptions?

2. No investment goals / 3. Not diversifying

I think we should be good:

1. We remain invested in our Canadian and U.S. individual stocks near-term, although I could see a near-term day in 2025 or 2026 whereby I sell off all remaining/handful of U.S. individual stocks we own and just put all ex-Canada stocks into a low-cost ETF like my favourite to date: XAW. I would however keep my existing 25 Canadian stocks for income and growth for now; to avoid capital gains in our taxable accounts.
2. We are not focused on short-term returns since we remain 90% equities. That said, short-term, we are hopefully setting aside enough cash/cash equivalents in 2025 to draw down said cash in 2026 and 2027. Planning for 2028+ has not started yet but we have time to organize ourselves …
3. We have our long-term drawdown plan: NRT which means a mix of living off dividends from our Non-Registered Accounts (N) with corporation withdrawals, drawing down our RRSPs (R) over time, and therefore leaving our TFSAs (T) until the end.

Our hybrid investing approach using a mix of stocks and ETFs is not going to change:

1. We own a number of Canadian dividend-paying stocks (with some U.S. stocks for now) for income and growth.
2. We own a few low-cost ETFs for extra diversification.

4. Focusing on the short-term

Fail!

I’m looking forward to the short term!

We are looking forward to our semi-retirement years and seeing what opportunities may appear in the coming years. I get what the infographic is saying though. 

5. Buying high and selling low

I can’t predict the future, can you?

I’m at a point in my investing life whereby if I have the money, sure, I will invest more but I don’t have to.

Besides, when you index invest, the best price is today’s price. The stock market is a forward looking tool.

“Someone is sitting in the shade today because someone planted a tree a long time ago.” – Warren Buffett

6. Trading too much

Nothing really to worry about here. I’m no longer 22-years-old and into penny stocks on this list!

Here are other ways to kill your retirement plan:

7. Paying too much in fees

No longer a problem via owning many individual stocks; no trading, I only do some periodic buying and we maintain low-cost ETFs for growth.

8. Focusing too much on taxes

In other articles on my site about investing mistakes, I’ve seen some expert concerns about dividend income in a taxable account and at the same time, I’ve seen the same experts say not to let the taxation tail wave the investing dog per se.

Mixed messages for sure.

When it comes to dividends, I continue to remain on record that dividends are not the be-all, end-all but work for us especially in our non-registered accounts in that:

• any company that does not pay out a dividend, may alternatively provide other forms of shareholder returns: in the form of future capital gains, stock price increases, share buybacks, other.

This means dividends aren’t everything and never have been but they can be very good.

So I do like them. I will spend them. I hope to get more of them over time!

9. Not reviewing regularly

We review our portfolio every few months, in detail. We are good.

10. Misunderstanding risk

I like this one. I feel market volatility and risk while related are not the same.

I monitor our portfolio performance often but I’ve largely given up on detailed benchmarking since it makes no sense to obsess over benchmarking if you are not meeting your objectives.

As long as you are meeting your goals, that’s good. That’s the priority.

Obsessing over a benchmark and feeling the need to meet an index because some expert said it was a good idea, is not.

12. Reacting to the media

Guilty.

I mean, recent tariff wars have been terrible for many reasons. While I have not yet adjusted my portfolio due these wars, I do find all the annexing of Canada rhetoric both very problematic and very concerning.

13. Forgetting about inflation

See above.

I use 3% higher spending per year in my projections.

Is that enough I wonder? You?

14. Trying to time the market

Nope.

I basically invest the money when I can.

Now we need the money from our portfolio to live on, I will likely pursue some form of dollar-cost averaging in reverse.

15. Not doing due diligence / 16. Working with the wrong advisor

The Visual Capitalist infographic relates to credentials, experience and a positive track record from your financial advisor. Well, I am My Own Advisor. I only have myself to blame (or applaud) if things don’t work out.

17. Investing with emotions

With thanks/attribution: The Behavior Gap. 

Easy to say, very hard to do!!

Sticking to your investment plan sounds easy, especially when markets are doing well, but now we’re into extremely challenging and volatile times it’s not so easy I know.

When stocks fall, our emotions make us think they will fall even further and we need to do something.

When stocks rise, our emotions make us believe they are going to rise even more often providing false confidence.

Tuning out the investing noise to me means:

• Going against your natural emotions at times. Staying calm when others are losing their minds.
• Thinking and acting long-term when others are being short-sighted.
• Making ongoing plans that focus on months or years.
• Largely doing nothing when professionals, talking heads, and markets are tempting you to do something.

18. Chasing yield

Not anymore!

In my recent Q&A, sure, I would have more income if I didn’t index invest but I like the lazy part of my portfolio for growth – which has been very good in the last 10+ years with low-cost ETFs.

19. Neglecting to start

No longer applicable. FWIW though, I did start investing with just $25 in my early 20s.

My advice to any 20-something wanting to invest: just start and keep at it.  

20. Not controlling what you can

As I age, I’m trying to let go of what I can’t control.

Not easy, but probably better for my health and wellness!

In addition to the items above, here are some others collated from previous posts:

21. Reluctance to realize capital gains

Potentially this will be an issue for some investors as they age but I highly doubt it for me/us. I will absolutely realize capital gains in our taxable accounts as I get older.

22. Drawing RRSP/RRIF income too late

RRIF withdrawals are fully taxable so by constant deferral until the early 70s, some retirees might end up paying more lifetime tax by deferring their RRIF withdrawals.

That won’t be me.

I definitely plan to avoid this problem by drawing down some of our RRSP/RRIF assets starting in our 50s.

23. Drawing CPP and OAS income too early

Generally speaking, there are good reasons to take Canada Pension Plan (CPP) and/or Old Age Security (OAS) later in life, when:

1. you don’t necessarily need the money to live on now – use up some personal investments before age 70;
2. you have good reason to believe that you have a longer-than-average life expectancy into your 80s;
3. you believe both CPP and OAS are integral to your inflation-protected, fixed-income financial well-being as you age;
4. you are concerned about market risk as you age;
5. you are not concerned about leaving a large estate – you want to die with zero per se.

24. Poor use of TFSAs (Tax Free Savings Accounts)

Another mistake at any age is the poor use of any TFSA as just a savings account.

I’ve never been a fan of the name – I prefer to call the TFSA this for us since 2013.

I’ve used our TFSAs as investment accounts since Day 1. There is now hundreds of thousands of dollars in there. At the time of this post, we own many Canadian dividend-paying stocks inside our TFSAs along with low-cost ETF XAW for semi-annual distributions and growth. I don’t see our overall (hybrid) approach changing anytime soon.

25. Incorrect Asset Allocation

As I approach retirement, it’s good to remind readers I consider our accounts as one big portfolio, I adjust our asset allocation and asset location a bit because of that.

Here is an overview of what I mean at the time of this post:

• Daily Savings/Spending:
  • Cash in a High-Interest Savings Account (HISA) for near-term spending (e.g., travel, property taxes).
• Taxable Investing x2:
  • Mostly Canadian stocks.
  • Some cash/cash equivalents like ISA (Interest Savings Account) for an emergency fund.
• TFSAs x2:
  • Mix of Canadian stocks + XAW ETF.
• RRSPs x2:
  • Mix of Canadian stocks, a few U.S. stocks and mostly low-cost ETFs like XAW + QQQ.
• LIRA x1:
  • Low-cost ETFs including a global one HEQT.

Amazing, still relevant all these years later – you can read about my asset location, location, location biases here.

Avoiding some big retirement mistakes

25 items!!??

Easy to write but hard to be perfect on.

I will monitor my progress on these and see where I get.

I look forward to learning what mistakes you want to avoid too.

Mark

Mark Seed is a passionate DIY investor who lives in Ottawa.  He invests in Canadian and U.S. dividend paying stocks and low-cost Exchange Traded Funds on his quest to own a $1 million portfolio for an early retirement. You can follow Mark’s insights and perspectives on investing, and much more, by visiting My Own Advisor. This blog originally appeared on his site on March 29, 2025 and is republished on Findependence Hub with his permission.