The 5 retirement traps

Happy Tuesday! Retirement math keeps shifting under our feet lately, and today's issue gets into what your real number should look like, wherever you're starting from.

On The Money Today:

Let's get into it.

How fast you spend a $2 million portfolio matters more than the balance itself. At a 3% withdrawal rate, the money keeps growing for decades. At 7%, it's gone by year 26, even though every scenario starts from the exact same number.

Keep reading our Must Read to see the specific traps that push retirees from the safe end of this chart toward the risky one.

Skipping state income tax sounds like an easy win, until the HOA fees, home insurance premiums and hidden costs of a new zip code start adding up. Florida gained a net total of just 815 retirees last year, once you count everyone who left too, a sign the math isn't as simple as "no income tax equals more money in your pocket."

Why it matters: A state can be tax-friendly and still be more expensive to live in overall, so the number that actually determines your retirement budget is what's left after taxes, insurance, HOA fees and cost of living, not the tax rate alone.

For generations, owning a racehorse meant private stables, deep pockets and an invitation only a handful of people ever got. MyRacehorse changed that.

Now, for as little as $100, you can hold a real fractional stake in a professionally trained Thoroughbred, the same caliber of horse that's competed in the Kentucky Derby and the Preakness Stakes. And you won't just be cheering from your couch: the MyRacehorse app hands you training updates, race-day access and behind-the-scenes content, so you can follow your horse's journey from the stable to the finish line.

A six-figure balance can feel small next to the numbers other people brag about. But the real question isn't how big your savings are, it's how you turn them into income that lasts as long as you do. A few specific moves made early in retirement decide whether that balance stretches for decades or runs dry in years.

Why it matters: The gap between retirees who plan their withdrawals and their Social Security timing together, and those who don't, can add up to tens of thousands of dollars over a 30-year retirement, and most people never realize they're leaving it on the table.

Getting to $2 million doesn't mean the hard part is over. Wealth preservation takes a completely different mindset than wealth building, and the mistakes here are easy to miss until they've already cost you. And they're not dramatic losses, but small, ordinary decisions that slowly chip away at a portfolio built over decades.

Why it matters: Northwestern Mutual found only 36% of millionaires consider themselves "wealthy," and nearly half say their own retirement planning could use work, proof that hitting a big number doesn't automatically protect it.

The correct answer is B) About 3%. Even after decades of saving, only a small slice of American retirees ever cross the $2 million mark, which is exactly why protecting it, not just reaching it, becomes the real challenge once you're there.

Today's newsletter was written by Shirley Sze and edited by Rudro Chakrabarti. Stories by Vishesh Raisinghani, Brian O'Connell, Thomas Kent, Eric Esposito, Emma Caplan-Fisher, Kit Pulliam and Godwin Oluponmile.