I Almost Retired Early – 4 Financial Mistakes That Changed My Plan

It seemed so close. The freedom, the mornings without alarms, the idea of reclaiming my time before turning 55. I had a number in my head, a loose timeline on a spreadsheet, and the kind of quiet confidence that comes from reading a few too many “retire by 40” blogs. Then reality arrived, not all at once, but in slow, painful waves of things I had simply not planned for.

Honestly, the hardest part wasn’t discovering these mistakes. It was admitting that they were so preventable. If you’re somewhere on the path to early retirement right now, read this carefully. What follows is not theoretical. These are the exact financial missteps that derailed a plan I spent years building.

Mistake #1: I Thought I Knew What Healthcare Would Cost

Nothing in my financial plan was more embarrassingly wrong than my healthcare projections. I assumed a rough number, something in the range of $50,000 to $75,000 for lifetime coverage, and moved on. Underestimating healthcare costs is a major retirement planning mistake. Some retirees think they’ll spend $50,000 to $75,000 on lifetime healthcare needs, but professional estimates are more than double that. I was squarely in that camp.

Fidelity Investments released its 2025 Retiree Health Care Cost Estimate, revealing that a 65-year-old retiring in 2025 can expect to spend an average of $172,500 in health care and medical expenses throughout retirement. This represents a more than 4% increase over 2024, and that number has been climbing every single year. For those retiring earlier than 65, the exposure is even more severe because Medicare eligibility doesn’t begin until age 65.

Nearly two-thirds of pre-retired investors surveyed are underestimating their expected healthcare expenses in retirement. Only 27% of investors surveyed believe they will require long-term care, yet 70% of individuals turning 65 are likely to need this type of care. Think about that gap for a second. Roughly three in four of us will need long-term care, yet only about one in four actually plans for it.

Early retirees can secure healthcare by purchasing coverage in the health care marketplace, though they should know that marketplace premiums will increase by about 20% in 2026. That is a brutal number for anyone building a tight early retirement budget. I had to go back to the drawing board, rethink my timeline, and build in a dedicated healthcare reserve that I had completely ignored the first time around.

Mistake #2: I Underestimated How Long My Money Would Need to Last

Here’s the thing about retiring early. You’re not planning for 20 years. You might be planning for 40 or even 50. That changes everything about how you think about withdrawals. For years, financial planners and early retirees alike have relied on the so-called “4% rule” as a guideline. The rule says it’s generally safe to withdraw 4% of a balanced portfolio annually, adjusted for inflation, for a 30-year retirement.

Early retirees will want to keep caution in mind when calculating a safe starting withdrawal percentage. In the base case, the highest starting safe withdrawal percentage for a 40-year horizon is just 3.1%. I had been running my numbers using a 4% assumption without ever adjusting for the fact that my retirement could easily last four decades. That is a meaningful, potentially catastrophic difference.

In a high inflationary environment, withdrawing more at the start of retirement to keep pace, particularly when the market is down, can throw retirement planning off track – an effect known as the sequence of returns risk. Retiring into a down market early in your withdrawal phase is like bailing water from a boat with a hole in the bottom. The math turns against you fast, and recovering is much harder than most people expect.

Morningstar’s 2025 research found that retirees who experienced poor returns in the first five years and did not adjust their spending were far more likely to go broke. This one hit me hard. I had no flexible spending strategy at all. I had a number and a plan, with zero room to adapt.

Mistake #3: I Ignored the Real Penalty of Claiming Social Security Too Early

Let’s be real: most people instinctively want to claim Social Security the moment they can. I was no different. After paying into the system for decades, the logic of “take it now” feels completely rational. The problem is the numbers tell a very different story. If you claim Social Security at age 62, rather than wait until your full retirement age, you can expect up to a 30% reduction in monthly benefits. For every year you delay claiming Social Security past your full retirement age up to age 70, you get an 8% increase in your benefit.

There’s also an impact on total lifetime benefits. If someone lives to 85, they collect $45,600 less by claiming at 62 than they would by waiting until 67. Retiring at 62 means getting $1,400 a month for 23 years, a total of $386,400. If they waited until 67, they’d get $2,000 monthly for 18 years or $432,000. That is not a rounding error. That is a life-changing amount of money left permanently on the table.

Your annual cost-of-living adjustment is based on your benefits. This means if you begin claiming Social Security at 62 and start with reduced benefits, your COLA-adjusted benefits will be lower too. This compounding effect of a permanently reduced baseline is something I genuinely did not think through. Every inflation adjustment in the future applies to a smaller starting number.

When to claim Social Security benefits is a personal decision based on factors unique to you. The longer you wait to collect Social Security benefits, the more money you’ll earn. The decision isn’t right or wrong for everyone, but it deserves far more careful modeling than I gave it. I had treated Social Security like a fallback, not a strategic lever.

Mistake #4: I Didn’t Diversify My Retirement Portfolio Properly

I had money saved. Good savings, actually. The issue was how it was allocated. I was heavily concentrated in one type of investment, comfortable in a rising market, and completely unprepared for what a correction could do to an early retiree with no salary to replace lost portfolio value. The best way to save money for retirement is by creating a diversified portfolio of stocks, bonds, and other savings vehicles. This way, if one savings vehicle suffers, your other investments will remain strong. Unfortunately, too many investors put all their dollars into one type of investment, either incurring too much risk or not enough.

As you get older, adopting a more conservative investment strategy is generally advisable, with the percentage of equity holdings invested in your retirement accounts ideally decreasing over time. The aim is to reduce risk, which becomes increasingly important as you may not have the luxury of awaiting a market bounce-back following a downturn. This matters even more in early retirement. Unlike someone who’s 70, an early retiree cannot simply wait out a five-year bear market with ease.

The stock market can seem scary and volatile, but avoiding it can hurt your savings goals. Over the long haul, people with a diversified portfolio of stocks and bonds have historically saved more than those who keep it stashed in a bank account. Even in bad times, having stock exposure has paid off. The goal isn’t zero risk. It’s the right kind of risk for your specific timeline and withdrawal needs.

When you were younger, you could invest more aggressively because you had time to recoup any losses. As you approach retirement, however, the game changes and you may want to consider adjusting the level of risks you take. You’re going to need the assets you’ve accumulated for day-to-day expenses, which may cost more due to inflation. I learned this not from a textbook, but from watching my own poorly diversified portfolio swing wildly at exactly the wrong time.

The Deeper Problem: Overconfidence in My Own Numbers

Looking back, all four of these mistakes share a common thread: I trusted my own math too much, and I didn’t pressure-test any of it. According to the Lincoln Financial Group, more than 60% of retirees said they’d go back and do things differently when planning their retirement. I could easily join that statistic now. The plan felt solid because I wanted it to be solid. That’s not the same thing.

A recent AARP survey found that 20% of adults 50-plus have no money saved for retirement and 61% are concerned they will not have enough money to support themselves during their so-called golden years. Even among those who are saving, the confidence gap between what people think they need and what they’ll actually need is enormous. I was one of the “confident” ones, and I was still wrong.

Longer lives and lower savings are fueling a retirement security crisis for millions of Americans. The situation is worsened by inflation, rising healthcare costs, and the fact that someone turning 65 today has almost a 70% chance of needing some type of long-term care services. The convergence of these pressures is not something a spreadsheet made in an optimistic afternoon can capture.

I think the hardest thing to accept was that early retirement isn’t just a savings goal. It’s a complex, multi-decade risk management problem. And I had been treating it like a simple math equation.

What I Would Do Differently Now

Today, my plan looks very different. I have a dedicated healthcare reserve, built around realistic projections that include long-term care possibilities. Healthcare inflation is accelerating now, not gradually down the road. That makes 2025 to 2026 a pivotal window for re-assessing retirement savings targets and building medical-cost buffers. I can’t afford to ignore that window, and neither can you.

I’ve also overhauled how I think about withdrawal rates. Instead of a fixed number, I now use a flexible framework that allows me to reduce spending in years when the market underperforms. Delaying contributions can dramatically impact your future financial well-being. The power of compound interest is a beautiful thing, but it needs time to work its magic. The earlier you start investing, the more time your money has to grow. Starting earlier and contributing more aggressively is the most powerful corrective step available.

As for Social Security, I now model multiple claiming scenarios and compare the lifetime totals honestly. Most financial planners recommend holding off at least until your full retirement age, which is 67 for anyone born after 1959, before tapping Social Security. Waiting until 70 can be even better. It’s hard to sit with that advice when you want out of the workforce sooner, but the lifetime math is nearly impossible to argue with.

My early retirement plan isn’t dead. It’s just more honest now. The date got pushed back, the strategy got smarter, and I stopped confusing ambition with preparation. It’s a sobering but ultimately empowering place to be. What about you: have you run the real numbers, or just the ones that tell you what you want to hear?