Retirement Mistakes for High Net Worth Retirees: When Popular Advice Backfires.

The biggest retirement mistakes for high net worth retirees rarely look like mistakes. They look like good advice. Roth-convert aggressively, insure every risk, follow the 4% rule, trust your allocation. That guidance works fine for a saver with $200,000. When you have $1.5 million or more, the same moves can trip shadow taxes, waste premiums, and leave you living smaller than your money allows. The fix isn't more strategies. It's the right ones for your size.

I've spent a long time working with pre-retirees and retirees who built real wealth, and the pattern is consistent: the playbook that got you here can quietly work against you now. The video below walks through four of these traps. The sections after it update every figure for 2026 and put dollars on each one.

▶ Video: youtube.com/watch?v=TVib8537mBY, “Popular Retirement Advice That Can Backfire (If You Have $1.5M+)”

Watch: Patrick Shope on why standard retirement advice can backfire above $1.5M.

Myth 1: "Roth conversions are always the smart move"

Let's steel-man it first, because the case is real. A Roth conversion moves money from a traditional IRA into a Roth, where it grows tax-free for life and skips future required minimum distributions. Your neighbor does them. Your golf buddy brags about them. For a lot of retirees, converting in the right years is genuinely smart.

Here's where it turns. A conversion counts as taxable income the year you do it. Drop a big one, say $400,000, into a single tax year and you don't just climb the federal brackets. You set off costs that have nothing to do with your headline rate. The one that catches wealthy retirees most often is IRMAA, the Medicare surcharge.

In 2026, IRMAA kicks in above $218,000 of modified adjusted gross income for a married couple filing jointly, or $109,000 for a single filer. It's a cliff, not a ramp: one dollar over the line prices the whole year at that tier. The standard Part B premium is $202.90 a month per person. Cross into the first tier and you add $81.20 a month in Part B plus $14.50 in Part D, per person. At the top tiers the Part B surcharge alone runs several hundred dollars a month each (Source: Centers for Medicare & Medicaid Services, 2026 Medicare Parts B and D premiums and IRMAA brackets). And Medicare looks back two years, so a conversion you do in 2026 sets the premiums you pay in 2028.

A single oversized conversion can also push more of your Social Security into the taxable column and, if you're 65-plus, wipe out the new senior deduction. I've laid out how all of this stacks in the piece on when a Roth conversion actually backfires, and the mechanics of the surcharge in what IRMAA is and how the tiers work.

The reality isn't "don't convert." It's convert on purpose. Smaller amounts, spread across several years, each one sized to stop just short of the next threshold. Some people approach conversions like an eating contest. It's chess.

Myth 2: "You should insure against every risk"

The steel-man here is caution, and caution is a virtue. The insurance industry works hard to convince people with money that they need coverage for every conceivable event. Long-term care, more life insurance, riders on riders. And for many households, some of that coverage is exactly right.

But when you have substantial assets, you may already have the balance sheet to carry certain risks yourself. Let me show you the math the video uses on long-term care, as an illustration. Say a policy runs about $6,000 a year in premiums. Over 20 years that's $120,000 out of pocket. A typical long-term care episode might cost somewhere in the $200,000 to $300,000 range.

Now flip it. A couple with $2 million could earmark $300,000 for potential care and invest the money they would have spent on premiums. Six thousand dollars a year, growing at a hypothetical 6% for 20 years, lands around $220,000. Add that to the $300,000 already set aside and you're looking at roughly $500,000 available for care, potentially more than the policy would ever have paid.

The same logic applies to life insurance beyond your actual need. If your net worth is several million and your adult kids are financially independent, another couple million in coverage may be solving a problem you don't have. The federal estate tax exemption is high enough that most of these households aren't facing a federal estate tax at all.

I'm not telling anyone to drop their insurance. It comes down to your situation. I'm saying the wealthier you are, the more often the honest answer is "you can carry this yourself," and that's the answer the sales conversation almost never gives you.

Myth 3: "Follow the 4% rule"

The 4% rule has become gospel, and it earned its reputation. William Bengen tested it in 1994: withdraw 4% of your portfolio the first year, adjust for inflation after that, and the money survived every historical 30-year window he checked. As a floor against running out, it holds up.

But look at what it was built to prevent: a modest nest egg going to zero. When you have $2 million or more, running out usually isn't your real risk. The real risk is living like you're broke when you're not. The 4% rule is rigid by design. It doesn't care that the market is up 30%. It doesn't care that you want to take the whole family to Italy or help a grandkid with tuition.

Think about it this way. A couple we'll call Gordon and Pam have $2.5 million and follow the rule to the letter: $100,000 a year, adjusted for inflation, no matter what. Suppose three strong years push their portfolio past $3.2 million. Under the rule, they still take $100,000. The money grew and their life didn't.

A flexible approach, often called a guardrails strategy, adjusts as the portfolio moves: maybe $130,000 in the good years, trimmed to $90,000 when markets pull back. Same discipline, more life. In our office, the wealthier the household, the more I worry about the opposite of running out. I worry about people leaving their best years unlived to protect a number they'll never touch. I walk through the guardrails idea and a few others in the piece on alternatives to the 4% rule.

Myth 4: "My advisor's allocation already handles taxes"

This is the fair assumption almost everyone makes: my portfolio is allocated well, so the tax piece must be handled too. Allocation and location are not the same thing, and the gap is where money leaks quietly, year after year.

Asset location is about which account holds which investment. Tax treatment varies a lot by account type. Broadly, the assets that throw off taxable income, like bond interest or actively traded funds, tend to belong in tax-deferred or tax-free accounts, while the most tax-efficient holdings can sit in a taxable brokerage. Put the wrong asset in the wrong account and you generate taxable income you never needed to, every single year, for as long as you hold it.

On a seven-figure portfolio that drag adds up to real dollars, and it's invisible because nothing dramatic happens. There's no bad year, just a slightly worse one, repeated. The move here is coordination: have someone review which accounts hold which exposures and model the after-tax result, rather than assuming the allocation on paper is also the right allocation after the IRS takes its cut.

The through-line: preserving wealth is a different job than building it

Notice what these four have in common. Each is solid advice for the saver it was written for, and each turns costly at scale. Aggressive Roth conversions that trip Medicare surcharges. Insurance for risks your portfolio could absorb. A rigid withdrawal rule when you have room for flexibility. An allocation that ignores where the tax lands. The strategies that build wealth aren't always the ones that keep it.

The good news is that all four are fixable with the same discipline: know exactly where your income sits relative to the lines that matter. Our 2026 numbers sheet lays out the brackets, the IRMAA thresholds, and the RMD ages on one page, which is the starting point for sizing any of these decisions to your situation.

More money doesn't mean more of the same playbook. It usually means fewer moving parts, chosen more carefully. The goal isn't to look busy with strategies. It's to keep what you built and actually get to enjoy it.

Frequently asked questions