Still working? 7 money moves to avoid until you’re officially retired

Jason Sargent Tuesday, January 13, 2026

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Michael KurkoJanuary 14, 2026 at 12:23 AM

7 money moves to avoid until you’re officially retired (MoMo Productions via Getty Images)

You may be counting the years — or even months — before you retire. Perhaps you’re dreaming of slow mornings, no commute and total control of your days. But before you call it quits, there’s still one important thing you need to consider: timing.

Even the smartest financial decisions can backfire if you’re too hasty. While rolling over your 401(k), claiming Social Security, or selling your home may seem like logical next steps, each comes with hidden consequences if you pull the trigger too early.

To protect your nest egg and keep options open, here are seven money moves worth sitting on until your retirement is official.

⭐️ Must read: 13 big tax changes in 2026 that can boost (or shrink) your refund

1. Rolling over your 401(k) too soon

After your last day of work might seem like the right time to roll your 401(k) into an IRA. But if you do and you’re 55 or older, you won’t be able to take advantage of the “Rule of 55” — a benefit that lets you withdraw from your 401(k) penalty-free once you leave your employer in or after the year you turn 55.

If you think you’ll need that money before you’re 59 1/2, consider keeping it in your former employer’s plan. When you need retirement income to replace your salary, moving your savings into an IRA can offer lower fees and more control over investments.

🔍 Read more: Medical debt, forgotten 401(k)s, no care plan: What to fix before retirement hits

2. Claiming Social Security the moment you can

After funding Social Security for decades, it can be tempting to start taking benefits as soon as you’re 62. However, if you claim too soon, you could reduce your benefits by up to 30%. And if you’re still working, some of your benefits could be taxable, or temporarily withheld.

Waiting until your full retirement age, or delaying to 70, will increase your monthly payments, boosting your retirement income. That delay from 67 to 70 means giving up three years of payments for a 24% boost with a breakeven point of around age 80 to 82. If you expect to live past that, delaying typically pays off.

If you need money before then, consider tapping into your savings or taking on part-time work to avoid permanently reducing your payments.

🔍 Read more: 90% of Americans break this Social Security 'rule' — here's why they're right

3. Rushing to sell your home before you’re retired

Downsizing before retirement might sound like an easy way to free up cash and cut expenses. But selling too soon can backfire — real estate markets shift, and commissions, closing costs and moving expenses can quickly eat up what you’d gain.

There’s a reason 75% of Americans over 50 say they prefer staying in their own home, and 73% want to remain in their communities.

Instead of rushing into a move, wait at least a year after settling into retired life. That gives you time to figure out what you actually want in your next chapter. Maybe staying close to family, medical care and a familiar community matters more than you expected. Waiting gives you clarity — and the option to change your mind.

🔍 Read more: 8 outdated 'rules’ worth breaking in retirement

4. Paying off your mortgage to feel debt-free

What better way to step into retirement than with a home you own outright? But pouring all of your cash into your house can leave you without the liquidity you might need for emergencies, health care or other unexpected costs.

Half of Americans over 50 have no emergency savings, making them vulnerable to tapping retirement funds in a crisis. Meanwhile, with mortgage rates currently around 6% and the stock market historically returning about 10% annually, paying off your loan early might not be your best move.

Instead, focus on building a solid emergency fund and maximizing your retirement contributions. Once you’ve retired and your income is stable, you can pay down your mortgage with confidence — without sacrificing flexibility you’ll need along the way.

🔍 Read more: Should you pay off your mortgage early? 5 factors to consider

5. Dropping health insurance before Medicare

If you’re retiring before 65, skipping health insurance until Medicare kicks in might seem like a smart way to save money. But a single ER visit can run you $1,500 to $3,000 — far more than a few monthly premiums.

Before you retire, price out your options. COBRA typically costs around $760 a month for a single adult (you pay the full premium plus 2%), while Affordable Care Act plans run from $300 to $800 a month, with many people qualifying for subsidies.

Adding yourself to your spouse’s plan is a cheaper option. Once you’re eligible for Medicare, compare Part A, B and D options (plus supplemental coverage) to ensure there’s no gap in protection.

🔍 Read more: 6 insurance policies that matter most after retirement

6. Relocating for taxes or lifestyle before you know true costs

Moving to a no-income-tax state or a sunny beach town may sound like an ideal retirement, but relocating can cost more than it saves. State laws vary widely on pensions, Social Security and property taxes. Health care, insurance premiums, and even the cost of groceries can also add up to big surprises.

If you’re considering a move overseas, many countries require residency periods of up to five years or longer before you can apply for public health care. Until then, you’d need private coverage as proof for residency.

The best move? Test-drive a new location before fully committing. Rent for a few months. Track what you spend on groceries, utilities, insurance and health care. And price out the services you’ll need long-term.

Once you learn what to expect, you’ll know if you can truly afford to relocate.

🔍 Read more: 9 states that still tax retirees' Social Security (and one that's quitting in 2026)

7. Overhauling your portfolio as you near the finish line

On the home stretch to retirement, you may be tempted to lock in investments you earned or chase down last-minute gains. But shaking up your investment strategy right before retirement can hurt rather than help.

Move too conservatively, and you can lose pace with inflation and choke growth that funds your retirement for decades. Similarly, taking new risks could expose you to a market downturn right when you’re needing to withdraw funds.

Rather than sudden changes as retirement nears, gradually shift your asset mix over the five to 10 years before retirement, adding income-generating investments and reducing volatility while maintaining growth exposure. Once you’ve retired and are clear on financial needs, you can fine-tune your strategy from a place of stability rather than panic.

🔍 Read more: 7 pieces of investing advice that experts say are useless

Bottom line: Moves that make sense — when the timing’s right

Retirement isn’t just about the moves you make, but when you make them. Rolling over accounts, claiming benefits, moving to a new state, paying off debt or shifting your investment mix all make financial sense at the right time, but rushed decisions can lock in permanent consequences.

The first year or two of retirement gives you clarity you don’t have beforehand — real spending patterns, actual healthcare costs, whether you want to leave your home. Or not.

Get to know your financial reality before making moves you can’t reverse. The difference could mean thousands in additional benefits, lower tax bills and the confidence that comes from making decisions based on real data, and not assumptions.

JASTIN MAG

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