7 Mistakes Guaranteed to Ruin Your Retirement

How’s that retirement fund going?

If you’re like a lot of workers, you may have doubts about whether you’ll have enough money tucked away to avoid spending your final years living on ramen noodles.

Just 23% of respondents said they were “very confident” they would have enough money for a comfortable retirement, according to the 2019 Retirement Confidence Survey prepared by the Employee Benefit Research Institute.

Individual workers’ reasons for not being more confident about their retirement savings vary. But if you make these seven mistakes, you’re virtually guaranteed to retire poor.

1. Keeping up with the Joneses

You can’t spend your whole life pretending to be rich and then think you’ll retire rich, too.

Living within your means isn’t always glamorous, but it is smart. And being smart is what will make you a wealthy retiree.

Rather than upgrading your smartphone every two years and your car every three, try being content with what you have. It doesn’t matter if all your friends are remodeling their kitchens: If yours works perfectly fine, leave it be.

Having a realistic budget is the first step toward living within your means. For specifics, check out “8 Secrets to Building a Budget That Works.”

2. Not saving enough money

When you’re not spending money to constantly upgrade your toys, you’ll have more money to save.

With traditional pensions all but extinct, it’s up to you — and you alone — to save up the cash needed to live comfortably in retirement. Don’t count on Social Security to do that either. The average monthly Social Security retirement benefit was just $1,471 as of June 2019.

Failure to save enough money is a sure way to retire poor. Ideally, 10% to 15% of your income should be going into a retirement account each month. If you are behind in funding your savings goals, you probably should save even more.

3. Making the wrong savings priorities

On the other hand, you can save money but have your priorities all wrong.

Yes, college for the kids is important, but not at the expense of your retirement account. The kids can always get scholarships, jobs or even loans if absolutely necessary.

Make your retirement savings a top priority. Again, set aside 10% to 15% of your income in retirement accounts. That may seem like a lot of money to save each month, but that’s why you aren’t keeping up with the Joneses, right?

Once you hit that level, start putting money in the kids’ college funds.

4. Saving money in the wrong accounts

Another common mistake is putting retirement money in the wrong accounts. A typical savings account isn’t going to cut it.

Instead, put that money in tax-sheltered retirement accounts such as 401(k)s or individual retirement accounts. These accounts come with tax benefits as well as stiff penalties for early withdrawals. Avoiding such early withdrawals is an essential component of ensuring your savings are still there at retirement time.

And by all means, if your employer offers a 401(k) match, put your retirement savings there first. You’d be a fool to pass up that free money.

5. Financing everything

Today, retailers make it easy to buy everything — from furniture to a car — on a payment plan. However, you’ll never have money to save for retirement if you finance every purchase.

Rather than spend money on interest, flex your self-discipline muscles and wait until you have enough money saved up before buying things. If you keep yourself out of debt, you’ll be amazed at how far you can stretch paychecks. Then, you can live comfortably now and bank enough to live on comfortably in the future.

6. Letting your credit score go

If you do need to finance something — houses and cars are the usual suspects — you’ll want to have excellent credit in order to get the best interest rates and terms.

Otherwise, you’ll end up paying sky-high interest, sending precious money to your creditors that could be used to bolster your retirement account instead.

If your score could use a boost, check out “7 Ways to Boost Your Credit Score Fast.”

7. Being a chicken when it comes to investments

Finally, “no guts, no glory” can apply to your investments.

Sure, you don’t want to be dumb about your money. Placing 100% of it in volatile stocks a few years before retirement is a good way to land in the poorhouse. But at the same time, be aggressive enough with allocations to ensure your returns at least outpace inflation.

If you need a quick crash course on terms like “diversification” and “asset allocation,” start with “14 Financial Words You Need to Understand.”

If you’re feeling a bit lost about exactly how to diversify your investments or pick a fund, check out “Build a Successful Retirement Plan With These 5 Steps.”

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
10 U.S. Jobs That Are Disappearing Fastest

Think twice before pursuing these shrinking occupations.

Eat This Food If You Want to Avoid Alzheimer’s Disease

One type of food associated with the Mediterranean diet offers especially large benefits.

9 Houseplants That Remove Toxins From Your Indoor Air

These plants may also do everything from reduce the amount of dust in your home to improve your productivity.

7 Kitchen Gadgets That Make Healthy Cooking a Breeze

These small appliances and cooking aids make healthy eating easy — and they’re all available on Amazon.

19 Things You Should Never Buy at a Grocery Store

These household necessities are overpriced at the grocery store. Get them cheaper at these places instead.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

8 Tips for Retiring Comfortably on Social Security Alone

It’s never too early to start learning how to live well while living on less.

Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

15 Free Streaming Services to Watch While Stuck at Home

These free movie streaming sites offer thousands of movies and TV shows, including recent releases and beloved classics. If you love free movies, online sites are where you need to look for the best list of features that are just one easy click away.

6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?

The rules are complicated when it comes to eligibility for survivors benefits.

27 Things You Should Never Pay For — and How to Get Them for Free

When you know the tricks, you can save big on all kinds of useful things that others pay for.

15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

10 Things I Always Buy at Trader Joe’s

From snacks to sweets to side dishes, stock your cart with these time-tested favorites on your next TJ’s run.

9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.