7 Mistakes Guaranteed to Ruin Your Retirement

If you are making even one of these money mistakes, you'll probably end up eating ramen noodles in your golden years.

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.

According to the 2017 Retirement Confidence Survey prepared by the Employee Benefit Research Institute, just 18 percent of respondents said they were “very confident” they would have enough money for a comfortable retirement.

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

Parrots sit atop perchesNuk2013 / Shutterstock.com

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

A woman holds a piggy bank upside downandriano.cz / Shutterstock.com

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 either. The average monthly Social Security retirement payment was just $1,404 as of December 2017.

Failure to save enough money is a sure way to retire poor. Ideally, 10 to 15 percent 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

A savings jar labeled "college" is stuffed with cashFernando Ianniello / Shutterstock.com

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 percent 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

A woman logs in to a savings account onlineRawpixel.com / Shutterstock.com

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. Money Talks News founder Stacy Johnson explains this further in “Ask Stacy: How Much Should I Contribute to My 401(k)?

5. Financing everything

maxuser / Shutterstock.com

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 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

Kasper1774 Studio / Shutterstock.com

If you need to finance something — houses and cars are the usual suspects — you’ll want to have excellent credit 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 “Boost Your Credit Score Fast With These 7 Moves.”

7. Being a chicken when it comes to investments

Chickens outsideJakkrit Phomwong / Shutterstock.com

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

Sure, you don’t want to be dumb about your money. Placing 100 percent 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 “Money Lingo You Need to Know for Financial Survival.”

If you’re feeling a bit lost about exactly how to diversify your investments or pick a fund, check out “5 Simple Ways to Invest Your Retirement Savings.”

Why do you think so many retirees struggle financially? Share your thoughts in comments below or on our Facebook page.

Marilyn Lewis contributed to this post.

Maryalene LaPonsie
Maryalene LaPonsie
After 13 years as a staffer for a Michigan legislator, I decided it was time to quit the commute and work from home instead. For the past three years, I’ve been penning ... More

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