One Expert Warns Against Making This Costly Mistake If You’re Retiring in 2026

A lot has happened in the world of personal finance in 2025—from the passage of new tax legislation to the AI boom that has lifted the stock market to record highs. For individuals planning to retire in the coming year, the financial landscape can be challenging.

To help pre-retirees decipher what’s happening, Investopedia connected with retirement expert Jean Chatzky. She has been in the personal finance space for decades, writing as a columnist for AARP and spending nearly 25 years as a financial editor at NBC.

This is an excerpt of the conversation, edited for brevity and clarity.

INVESTOPEDIA: Should people close to retirement worry about the concentration of the stock market in AI stocks like Nvidia (NVDA) and Google (GOOGL)? What can people do about it?

JEAN CHATZKY: People should be worried unless they have been engaged in active rebalancing. When the stock market runs hot, our [target] asset allocations tend to get out of whack.

There’s a lot of research on rebalancing intentions versus rebalancing in actuality. Essentially, what it shows is that a lot of people say that they rebalance [but] . . . just don’t do it. In a bull market, you end up overweighted in certain categories of stocks, like AI.

Therefore, [you] are taking more risk than you intended to take.

INVESTOPEDIA: For pre-retirees who are concerned about the state of the economy due to tariffs and signs of softening consumer demand—especially among those who are low or middle income—is there anything they should do?

CHATZKY: Besides rebalancing, I think the number one thing that people should be looking at is delaying Social Security. The lever that is actually going to make a big difference in retirement is Social Security. Delaying Social Security until you get as close to 70 as possible is a really smart move for the majority of people who can afford to do it [because it increases the size of your monthly benefit].

The second thing that I would say to look at, if you are feeling unconfident, is your ability to keep earning. Staying in the workforce a little bit longer is incredibly powerful. When you stay in, you give your retirement assets time to grow and [you] may still be able to contribute [to retirement savings accounts].

INVESTOPEDIA: If someone encounters a downturn at the beginning of retirement, should they consider changing their withdrawal strategy?

CHATZKY: The 4% rule becomes really problematic when you have a downturn in the first few years of your retirement. . . One of the headwinds that we’re facing is that retirement is going to be a lot longer for people than they anticipate.

A couple of things for people who are heading into retirement [to bear in mind]: it’s really important to move some money into cash and fixed income, with an emphasis on cash. You want to have a good couple of years of your money in cash, so if you encounter a down market in the first couple of years of retirement, you don’t have to sell assets at a loss in order to fund your lifestyle.

[Also, if] you are going to follow a variation of the 4% rule during your withdrawal phase, you’re going to want to take your foot off the gas a bit and not withdraw 4% during those years when the market is down.

And for those worried about volatility in the market, I like the idea of covering essential expenses with a combination of Social Security and some form of guaranteed protected income, like pension income or an annuity.

INVESTOPEDIA: What are some common mistakes you see pre-retirees make?

CHATZKY: For a long time, there was a rule [of thumb] that you were probably going to spend 70% to 80% of your pre-retirement income in retirement.

What we’re seeing in the data, is that it’s just not true. The folks at Chase—they have a great trove of data on how people actually spend in retirement—the three years before retirement and the three years after, people spend more, and tend to spend more on bucket list items, like big trips but also home improvements.

The goal is to take a look at what your life costs now and [consider] how that is going to change when you enter retirement.