13 Costly Retirement Mistakes Virginians Make in Their First Year on a Fixed Income

A retired shipyard worker in Newport News checks his mailbox in March and finds a letter from Social Security that doesn’t match a single number he budgeted for.

It’s not a billing error.

His Medicare premium jumps because of an IRA withdrawal he made two years earlier, back when he still had a paycheck.

These are the costly mistakes Virginians make in their first year on a fixed income.

Note: This is general information, not financial or tax advice. Tax rules and dollar amounts are subject to change, so confirm the current details with a professional.

1. Trusting COBRA to Buy Time

A retiree who leaves a Newport News job at 64 often assumes COBRA or a retiree health plan buys extra time before Medicare enrollment matters.

Wrong window.

Medicare’s special enrollment period only stays open while you’re covered through an employer you or your spouse currently works for.

COBRA and a former employer’s retiree health plan don’t count, even though both keep paying your medical bills.

Once that active coverage ends, you get eight months to sign up for Part B and only 63 days to add a Part D drug plan.

Miss the window, and the Part B penalty sticks for life: 10% added to your premium for every 12 months you went without coverage.

2. Missing the Age Deduction’s Catch

Virginia gives retirees 65 and older an age deduction worth up to $12,000, and many first-year filers never claim their full amount.

The full $12,000 only applies automatically if you were born on or before January 1, 1939.

Everyone younger loses a dollar of that deduction for every dollar their income tops $50,000 filing single or $75,000 filing jointly.

Cross those limits by $12,000 or more, and the deduction disappears completely.

It phases out dollar for dollar.

A retiree who pulls extra income from a one-time individual retirement account (IRA) withdrawal in year one can watch that deduction shrink to nothing on the very return it was supposed to help.

3. Assuming the IRS Follows Virginia’s Lead

Virginia never taxes a single dollar of Social Security, and that exemption leads many first-year retirees to assume the IRS leaves it alone too.

It doesn’t.

Add half your Social Security benefit to your other income, and cross $25,000 filing single or $32,000 filing jointly, and the federal government starts taxing part of your check.

Virginia’s exemption never covers that federal bill.

A retiree drawing a pension alongside Social Security in the same year often crosses that line without noticing, right in the middle of their first tax season on a fixed income.

4. Skipping Your County’s Tax Deadline

Virginia leaves real estate tax relief for older homeowners up to each city and county, so first-year retirees who assume one statewide rule covers them usually lose out.

Fairfax County caps eligibility at $90,000 in combined household income and $400,000 in net assets outside the home, with relief sliding from the full amount down to a quarter of the bill depending on where your income lands.

The deadlines rarely match.

Returning applicants there have until May 1, but a first-year filer’s paperwork and window often look different, and nobody mails a reminder.

Miss it, and the wait is a full year.

5. Doubling up Your First RMD

Retirees in Chesterfield County turning 73 face the same required minimum distribution (RMD) deadline as everyone else in the country, and the first RMD comes with a trap.

You can wait until April 1 of the following year to take that first RMD.

Wait that long, and a second RMD is due by December 31 of that same year, so two taxable withdrawals stack into one tax return.

That can push a retiree into a higher tax bracket for the year.

A costly stack.

Skip an RMD entirely, and the IRS charges 25% of the amount you should have withdrawn, though correcting it quickly drops that penalty to 10%.

6. Missing the IRMAA Lookback

A Virginia retiree’s Medicare premium can jump the same year their paycheck stops, and the reason has nothing to do with anything they did that year.

Medicare bases the income-related monthly adjustment amount (IRMAA) on your tax return from two years back.

Sell a house, take a big withdrawal, or collect a final bonus at 63, and you start paying the higher premium at 65, long after that income is gone.

It’s old news to you.

It’s brand new to Medicare.

A retiree who sold a Northern Virginia home the year before leaving work can watch their Part B premium jump hundreds of dollars a month over a sale that already closed.

7. Forgetting Withholding Stops With You

Retirees across Hampton Roads leave a paycheck behind and often forget the withholding attached to it leaves too.

No employer pulls tax from a pension, an IRA withdrawal, or a Social Security payment unless you ask.

Nobody withholds it for you.

The Social Security Administration lets you choose 7%, 10%, 12%, or 22% withheld from your monthly check with a simple request.

Skip that step, and Virginia can charge its own underpayment penalty on top of whatever the IRS adds, on a state return that first-year retirees are often filing with retirement income for the first time.

8. Trusting the COLA Too Much

Social Security’s cost-of-living adjustment (COLA) rose 2.8% for 2026, and many Virginia retirees build their whole first-year budget around that number covering everything.

It rarely does.

The COLA tracks a broad measure of consumer prices, not the costs that rise fastest for retirees, like Medicare premiums and long-term care.

A raise on paper can still fall behind the bills that matter most.

9. Draining Savings Without a Plan

A Virginia retiree’s first year without a paycheck is also the year spending habits are hardest to see clearly.

Some retirees keep spending at their working-years pace, betting that Social Security and a pension will cover the gap.

That bet doesn’t always pay off, and the shortfall shows up faster than most expect.

A retiree who pulls too much from savings in year one can shorten how long that money lasts by years, not months.

10. Grocery Tax Isn’t Gone

Virginia cut its state grocery tax to zero back in 2023, and many retirees assume that means groceries are tax-free everywhere in the state now.

They aren’t.

A 1% local option tax on food and personal hygiene items still applies statewide, funding schools and local services.

That penny per dollar is easy to miss on a receipt.

It adds up over a year of grocery runs on a fixed income.

11. Leaving a Gap Before Medicare

Retirees in Loudoun County who leave a job before 65 often assume health coverage simply continues somehow until Medicare kicks in.

That gap is on you.

COBRA can bridge it, but it usually costs full price with no employer share.

It typically lasts only 18 months.

The alternative is an Affordable Care Act marketplace plan, and early retirees who time their income right can qualify for a subsidy that lowers the monthly bill while they wait for Medicare at 65.

12. Misjudging Your Top Tax Bracket

Virginia's income tax brackets top out fast, and first-year retirees who assume a smaller income means a lower bracket are often surprised.

The state's top rate of 5.75% starts at just $17,000 of taxable income, whether you're single or married.

Combine a pension, an IRA withdrawal, and a little part-time consulting work, and a retiree can land in that top bracket within the first few months of the year.

The bracket hasn't moved much in decades.

Retirees drifting into it for the first time rarely see it coming.

13. Skipping the Long-Term Care Math

Virginia retirees often plan their first year around monthly bills and skip the long-term care conversation entirely.

Waiting costs money.

A semi-private nursing home room in Virginia runs about $123,005 a year, above the national median.

Assisted living averages $83,340 a year, also above the national median.

Long-term care insurance gets harder to qualify for and pricier every year you wait.