3 Retirement Mistakes 45-Year-Olds Make (And How to Avoid Them)

If you're in your mid-40s like us, you're likely juggling a lot right now: career responsibilities, kids' activities, aging parents, and trying to maintain your own health and relationships. With everything competing for your attention, retirement planning often gets pushed to the back burner.

Yet right now, at 45, you're standing at a critical crossroads in your financial journey. These are your peak earning years, but they're also your most crucial decision-making years that will determine whether you can truly enjoy the retirement you envision.

As financial advisors, we see this reality play out every day. On our recent NoBondsCast podcast, we shared stories from real clients who came to us thinking they were on track, only to discover some uncomfortable truths.

Take Mark, for example. He came to us at 46 with $1 million in his 401(k)—an impressive sum that gave him the confidence to believe he was "all set." Yet when we asked essential questions about how much he actually needed to retire and how much he could safely withdraw each month, he didn't feel confident in his assumptions. Another client, Jennifer, had diligently saved since her 20s but was still using the same investment approach she had chosen at 25, without considering how her life has shifted in over 20 years and the inflation challenges ahead.

The hard truth? Building lasting wealth in your mid-40s isn't about blindly contributing to retirement accounts. It's about making intentional decisions with clarity about where you're headed and establishing a plan of action.

Let's break down the three biggest retirement mistakes we see from 45-year-olds and how you can avoid them.

Mistake #1: Defaulting into Age-Based Investments Like Target Date Funds

If you've looked at your 401(k) options lately, you've probably seen those convenient target date funds with names such as  "Target 2040" or "Target 2045" that claim to handle the investment work for you. Maybe you even selected one because it seemed like the responsible choice, or was only what your employer offered.

We get it. When you're managing a career, family obligations, and everything else life throws at you, the "set it and forget it" approach is tempting. But here's what many of our fellow 45-year-olds don't realize: These funds are often far too conservative too early—and they're not tailored to your unique financial situation.

Take a closer look at how these funds work: they automatically shift from growth-oriented investments and move you out of equities into what the industry deems as "safer" bonds as you age. By the time you're 60, many target date funds will have 60% or more of your assets in fixed income. This might sound good, but it could seriously limit your long-term growth potential and move you out of the market, when you ought to be in it for the longest time possible.

Why This Is a Problem for Us at 45

When clients in their mid-40s first sit down with us, we often hear: "I have about $750,000 in my 401(k). I picked the fund with my retirement year in the name." When we dig deeper, we discover they have no idea what's actually in that fund or whether it aligns with their actual needs, dreams, and goal up to and through retirement. 

Here's the reality: At 45, you still have 20+ working years ahead of you, followed by potentially 30+ years in retirement. That's a 50-year investment horizon! A too-conservative approach now could mean sacrificing hundreds of thousands in potential growth—growth you'll need to combat inflation over those decades.

The Solution: Take Control of Your Investment Strategy

Instead of accepting the default option, here's what you can do right now:

1. Look under the hood of your current investments: Log into your 401(k) portal today and find out exactly what you're invested in. What's the allocation between stocks and bonds? 
2. Reassess your true risk tolerance: At 45, market volatility might make you nervous, but remember, your biggest risk isn't short-term fluctuations but rather not being able to outpace inflation year over year. A bond at 4% annual growth might not be enough to reach your goals.
3. Consider a more growth-oriented approach: Many of our 45-year-old clients benefit from maintaining a higher percentage of equities than target date funds typically recommend. But knowing how to buy, sell, and reinvest is essential in this process. 
4. Explore customization options: Many 401(k) plans allow you to create your own portfolio from available funds. If yours doesn't, consider whether an IRA rollover might give you more control.
   
   

Mistake #2: Thinking You Have a Plan... But Not Knowing Your Numbers

Let us ask you a question we ask everyone we meet with: How much money do you need to retire comfortably?

If you're like most 45-year-olds we meet, you probably responded with one of these:

• "Umm... a couple million?"
• "I've got a plan... somewhere."
• "My 401(k) portal said I'm on track."
• "I used that retirement calculator and..."

This vague approach to retirement planning is the second major mistake we see among our peers. Many of us believe we've "done the planning" because we used an online calculator years ago or have a dusty financial plan printed and bound sitting in a drawer somewhere. But when pressed about specific numbers, the details often become fuzzy.

Why This Is a Problem at Our Age

At 45, you've likely been saving for retirement for 20+ years already. That's fantastic! But here's where things get critical: the decisions you make in the next 10-15 years will have a much bigger impact than those first 20 years of saving.

Think about it this way: your retirement accounts and overall compensation structure is probably substantially larger now than they were in your 30s, meaning that performance and contribution decisions have magnified effects.

When clients tell us "I'm all set," we ask them:

• Exactly how much do you need to accumulate by retirement?
• What monthly income will your current trajectory provide?
• How will inflation affect your purchasing power?
• Does this account for a retirement you're excited for?

The pauses we hear tell us everything. What they have isn't a plan, it's more of a hopeful guess.

The Solution: Get Specific With Your Retirement Math

It's time to move from guesswork to concrete numbers. Here's your mid-40s action plan:

1. Calculate your actual retirement number: If you're currently living on $150,000 annually, you might need $300,000 yearly by retirement due to inflation. Using a 4.5% sustainable withdrawal rate, that means you need approximately $6.7 million in assets. Suddenly, that "couple million" target doesn't seem so adequate, does it?
2. Do a realistic retirement budget exercise: Your expenses will change in retirement. While work-related costs decrease, healthcare and leisure spending often increase. Take 30 minutes to sketch out what your actual retirement lifestyle might cost, thinking about what you'd fill your next stage of life with. Your goal shouldn't be to just get by in retirement, but to thrive in it.
3. Track your progress with actual metrics: Instead of vague feelings of being "on track," establish concrete milestones: "By 50, I need $X in retirement assets to stay on track for my goal." 
4. Review and adjust annually: Your life at 45 might look quite different by 50. Children graduate, careers evolve, and priorities shift. Make retirement planning an annual check-in, not a one-and-done exercise.

Real-life example: Lisa, a marketing executive, came to us at 47 thinking her $800,000 retirement account was "pretty good." After we ran the numbers based on her desired retirement lifestyle, she realized she needed to triple her savings rate and adjust her investment approach to close the gap. Now at 52, she's back on track—but those five years of clarity made all the difference.

Mistake #3: Underestimating Inflation and Safe Withdrawal Rates

We all feel the pinch of inflation today. Groceries, housing, education, everything costs more than it did just a few years ago. Yet when it comes to retirement planning, many 45-year-olds completely overlook how inflation will transform their needs over decades.

Let's put this in perspective: Remember what things cost in the early 2000s when we were in our 20s? A movie ticket was $5-6, a new car might cost $20,000, and the median home price was around $180,000. Fast forward to today, and those prices have nearly doubled in many cases.

Now project that same pattern forward to your retirement years. This isn't theoretical, it's math.

Why This Is Especially Problematic for Gen X

As Gen Xers now in our mid-40s, we face unique inflation challenges:

1. We're catching the tail end of traditional pensions: Unlike our parents, most of us won't have pensions to provide inflation-adjusted income throughout retirement.
2. We're sandwiched between financial obligations: Many of us are simultaneously saving for our children's education and helping aging parents, limiting our ability to maximize retirement contributions.
3. Healthcare costs are outpacing general inflation: By the time we retire, medical expenses could be 2-3 times their current levels.

When we ask clients how their current investment strategy accounts for inflation, the response is often a look of concern. The $100,000 lifestyle you enjoy today will require approximately $200,000 in 20 years at a modest 3% inflation rate. Without planning for this reality, you'll be forced to significantly downgrade your lifestyle or risk running out of money.

The Solution: Build an Inflation-Ready Retirement Strategy

Here's how we'd work with you to create a retirement plan that won't be devastated by inflation:

1. Adopt a realistic inflation assumption: In your planning, use at least 3% annual inflation, and consider running scenarios with higher rates to understand your vulnerability.
2. Understand the math behind sustainable withdrawals: A well-designed portfolio needs to support both your withdrawals and inflation adjustments. For example, if you withdraw 4.5% annually and inflation runs at 3%, your investments need to generate about 7.5% annually just to maintain your purchasing power.
3. Stay growth-oriented even near retirement: Many 45-year-olds believe they should get increasingly conservative as they approach retirement. The reality? With potentially 30+ years of retirement ahead, you need significant growth potential throughout your 50s, 60s, and beyond.

Real-world application: Tom and Sarah, both 48, restructured their IRA portfolio to focus on quality companies with consistent dividend growth rather than the bond-heavy approach their previous advisor recommended. This strategy positions them to receive increasing income over time, helping offset inflation's effects on their retirement lifestyle backed with a rules-based investment approach backed with strong company research.

Your Mid-40s Wake-Up Call: Time for Intentional Planning

Being in your mid-forties doesn't mean you're too late to take control of your retirement plan. In fact, you're at a pivotal moment. With kids getting older, careers reaching their peak, and retirement no longer feeling like a distant concept, now is the time to shift from autopilot to intentional planning.

The decisions you make in this decade will likely have more impact on your retirement success than anything you've done up to this point. Here's your action plan:

1. Take a fresh look at your investment strategy: Log into your accounts this week and examine what you actually own. Is your money still in the default target date fund you selected years ago? Are you too conservative for your actual time horizon?
2. Get clarity on your retirement number: Instead of vague notions of "a couple million," calculate exactly what you'll need based on your desired lifestyle and inflation expectations.
3. Test your withdrawal strategy: Run the numbers on how much income your current trajectory will actually provide. If you're planning to withdraw 4% annually from a $2 million portfolio, that's $80,000 per year before taxes. Is that enough?
4. Consider professional guidance: At this critical juncture, working with a financial advisor who specializes in pre-retirement planning can provide clarity and confidence.

Remember, intentional planning isn't about restricting your life today—it's about ensuring freedom and options tomorrow. The small adjustments you make now can have exponential benefits as you approach retirement.

Take the Next Step Today

At Beck Bode, we specialize in helping people in their mid-40s throughout Massachusetts, New Hampshire, and Michigan transform vague retirement hopes into concrete, achievable plans. Our approach focuses on clarity, structure, and confidence—replacing uncertainty with a clear path forward.

Schedule a complimentary consultation at one of our offices in Dedham, MA, Portsmouth, NH, Salem, NH, or Traverse City, MI to discuss your specific situation.

Schedule Your Retirement Clarity Consultation →

Want to dive deeper into these concepts? Watch the full NoBondsCast video where Ben and Jim break down these retirement planning strategies in detail.