Note: These general tips may not apply to everyone. Each situation is unique, and it is best to discuss options with a financial advisor. These are some of the more frequent mistakes we see when people approach retirement.

Retirement is coming.

After spending years in the workforce, the day you’ve finally dreamed of is right around the corner. The retirement account is in good shape and now it’s time to start a new life.

But you may need to make the money last over 20 years to avoid going back to work. Being smart about your investments means knowing what not to do along with knowing exactly what to do. The team at Roan Capital Partners has you covered with a list of things not to do in retirement.


The house is almost paid off and you’ve been thinking about pulling some money out of your retirement to finish off the mortgage. It’s one less bill to pay, right?


“Right now, most people are going to have a pretty low interest rate on their mortgage,” said James R. Ferguson III, Certified Financial Planner and Managing Partner for Roan Capital. “Long-term, even if you are investing moderately, you’re going to outperform interest rates in the three, four, or five percent range. So rather than have the money to pay off the house, which might grow at one or two percent a year, you basically invest the money and you would earn more. And it would give you the flexibility to live in your house even if it’s not paid off.”

And even if you pay off the mortgage, taxes will still need to be paid. Not paying taxes could lead to significant consequences.

Financial advisors need to give their clients options and to keep those options as wide open as possible because you never know what could happen. The advisors at RCP say if a person pays off a house and must take an equity line of credit or sell the house, it leaves the person exposed to one asset class and the person is susceptible to external factors that could lower the value of the home.

Taking a lump sum out of the emergency fund or pension to pay off the mortgage means a homeowner will also have to pay taxes on top of paying off the mortgage. This means paying an extra 15 or 20 percent to save three or four percent.


It is tempting to go out shortly after retirement and buy the dream car you’ve always wanted. But taking the money out now could potentially hurt you in the future.

“For most people, they retire with a certain amount of money and need to make it last for 20 to 30 years,” said Joy Garland, a Certified Fund and Income Specialist and Managing Partner for Roan Capital. “Purchasing an expensive car is just not the best use of that money. I encourage people to have a dependable car because lots of time people are going to travel but don’t buy the frivolous or toy cars because in the long run it’s just not a good decision.”

Another problem is when buying a new car, the value depreciates significantly. A vehicle is not an investment. It is one thing if a person has the means to buy an expensive car and not hurt themselves in the future, but most people borrow from their future to pay for today.

One option is to lease the dream car for a certain period without paying out a lump sum. This way people don’t have to be locked in to a payment that may make you cash poor.


While paying for your children’s college may seem like a great thing to do, financial advisors recommend against using the money from your retirement to pay off college debt.

“Your retirement money is long-term,” Garland said. “Student loans are pretty easy to get. Many have low interest and low payments. I would encourage people to find alternative solutions to help children pay for college rather than using their retirement savings.”

Taking money out of retirement could also result in a tax penalty or forcing the retiree to pay income taxes on distribution.

Another reason is paying from a retirement plan may affect a student’s eligibility for need-based student financial aid. According to, distributions from a retirement plan will be treated as income to the beneficiary on the student loan application. Tax-free distributions, including contributions from a Roth IRA, will be reported as untaxed income and could cut aid edibility by up to 50 percent.


It is critical to understand tax consequences when deciding to move retirement savings. Even if a person wants to be done with the company they retired from, there are rules to understand before deciding to take that step.

“Either they don’t deposit the money within 60 days after they get it, or they basically will do a Roth conversion without knowing it or they will not roll it over,” Ferguson said. “There’s a lot of little things you have to be careful about to make sure you don’t get yourself in a situation where you lost a third of your retirement to taxes while you’ve been avoiding it for 40 years.”

Ideally, a retiree would speak to a financial professional about their options regarding moving retirement plans. A lot of people do not understand the options regarding retirement accounts and once a decision is made on where to move it, it cannot be undone.

Many companies will give their retired employees time to figure out the best option. A lot of times people can keep their money in a company’s retirement plan for up to a year. Ferguson would recommend individuals understand the available options by talking to a financial advisor.


When many people reach retirement, they decide to take care of a couple of things before going on that long-awaited trip. Most people need to go ahead and do things as soon as possible.

“In real terms, most of the time you have 10 or 15 years that you and want to do those things,” Ferguson said. “It goes pretty fast. And most of the time, people stay busy in retirement now. I’d recommend planning the things you want to do and be smart about it but make it happen. If you put it off for five or 10 years, chances are you probably won’t get it accomplished.”

Planning to achieve those items before you reach retirement is the best way to go. This better prepares you to understand the time frame for accomplishing what you set out to do.

Again, not all these tips will fit every situation. Every situation is different and retirement plans can be tailored to each unique individual.

Call Roan Capital Partners today to set-up a consultation and see the best ways to get the most out of your retirement.

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