The Top 5 Mistakes We See Made With Financial Plans

Creating a financial plan is one of the most important steps toward long-term financial security. Unfortunately, many individuals and families unknowingly build plans on flawed assumptions that can create stress, shortfalls, or missed opportunities later in life.

After reviewing hundreds of financial plans, we consistently see the same mistakes show up again and again. Below are the top five financial planning mistakes we see and how avoiding them can dramatically improve your long-term outcomes.

1. Underestimating Expenses

One of the most common mistakes in financial planning is underestimating future expenses, especially in retirement.

Many plans rely on rough estimates or outdated spending assumptions that don’t reflect real life. Healthcare costs, travel, home maintenance, taxes, and inflation all tend to rise over time. Even small underestimations can compound into significant gaps over a 20–30 year retirement.

Why this matters:
If your expense assumptions are too low, your plan may appear sustainable on paper but fail in reality.

What to do instead:
Build expense projections based on actual spending, adjust for inflation, and stress-test your plan for higher-than-expected costs.

2. Overestimating Growth Rates on Investments

Another major planning error is assuming overly optimistic investment returns.

While markets have historically grown over the long term, returns are not guaranteed and are rarely consistent year to year. Plans that assume high, steady growth rates often ignore volatility, sequence-of-returns risk, and the impact of taxes.

Why this matters:
Overestimating returns can create a false sense of security and lead to overspending or under-saving.

What to do instead:
Use conservative, realistic return assumptions and play out multiple market scenarios to understand how your plan holds up in good markets and bad.

3. Being Too Comfortable With Debt in Retirement

Carrying debt into retirement is becoming more common but that doesn’t mean it’s harmless.

Mortgages, credit cards, and personal loans can significantly reduce cash flow during years when income is often fixed or declining. Rising interest rates can also make debt more expensive than originally planned.

Why this matters:
Debt limits flexibility and increases the risk of having to withdraw more from investments during market downturns.

What to do instead:
Plan to have as little debt as possible in retirement so you sleep comfortably at night.

4. Not Accounting for Financial Support for Loved Ones

Many financial plans focus solely on the individual or couple but overlook financial support for loved ones.

This can include adult children, aging parents, grandchildren, or other family members. Even occasional support can add up significantly over time.

Why this matters:
Unplanned family support often becomes one of the biggest drains on retirement assets.

What to do instead:
Build in a realistic budget for support.

5. Poor Planning to Spend Down Assets to $0

Some financial plans are intentionally built for a persons assets to be spent down to $0 by the time they die. We find this to have plenty of flaws in that seniors worry about money the most. Also it’s just human nature to not like seeing your asset values go down over time. It’s just a certain level of comfort.

Why this matters:
Overspending risks running out of money during your lifetime.

What to do instead:
Create a plan designed to get the most out of your financial life without risking your financial independence.

Final Thoughts

A financial plan is only as good as the assumptions behind it. Avoiding these common mistakes can mean the difference between confidence and uncertainty, flexibility and stress.

If you’re unsure whether your current plan accounts for realistic expenses, conservative return assumptions, debt management, family support, and long-term spending strategy, it may be time for a second opinion.

A well-built financial plan more about preparing rather than being perfect.