There are three critical mistakes that most people make when preparing for retirement that really should be resolved beforehand.

The first mistake is to assume that you will be in a lower tax bracket in your retirement years. This has been pushed by more than a few financial gurus online that tell people to get a deduction during their working years by putting money in 401(k)’s and IRA’s.

This is likely a miscalculation on the part of many people getting ready for retirement. The country is $22 trillion in debt with $1 trillion deficits every year, plus 10,000 Baby Boomers retiring every day.

In 2026, Medicare goes broke. In 2032, Social Security goes broke. The question is, how do we account for the massive gaps in these programs?

To suggest that we will be in lower tax brackets ten years from now is to be completely ignorant of the math involved. Some experts have even claimed that we will just print and inflate our way out of the problem. The trouble is these programs are pegged to inflation.

We can’t borrow or print our way out, we aren’t going to reduce expenses, so the only likely solution at this point is raising taxes. The first mistake is listening to the wisdom of yesterday without considering that times have changed, but if we look at the fiscal landscape of the country, it’s hard to arrive at any other conclusion.

The second huge mistake is having IRA and 401(k) balances that are so big in retirement that required minimum distributions cause your Social Security to be taxed. Most people don’t realize the impact of Social Security taxation.

If you have more than $44,000 in provisional income as a married couple, then up to 85% of your Social Security can become taxable at your highest marginal tax rate. Most people start taking more money out of the retirement accounts to make up for the shortfall which can have serious long term impacts.

People who have their Social Security taxed will, on average, run out of money 5 to 7 years faster than people who don’t get taxed. The way you avoid this is by shifting your money to tax free accounts and pay the tax now before you retire.

The third mistake is not taking advantage of Roth IRA’s and Roth 401(k)’s while you still can. Every year that goes by that you fail to take advantage of these accounts is an opportunity you will never get back.

There are opportunity costs associated with not contributing money to these kinds of accounts. If you have a lot of money sitting in your taxable bucket, there are only so many ways to get the money out of there, like paying taxes on Roth conversions or a life insurance retirement plan.

Roth IRA’s have great liquidity, so every year that goes by that you don’t fund these accounts is a mistake.

The cost of admission to a tax-free account is paying a tax, and taxes are currently in a period where they are historically low.

You can’t go back in time and recuperate the lost years where you didn’t contribute to your tax-free accounts. More people should have a balance between their buckets, also known as income tax diversification. By being aware of the three mistakes, you will be less likely of needing to make massive expensive shifts to be tax free later in life.