7 Ways to Ensure You Never Have Enough Money to Retire

Man of retirement age
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The good part about being alive today is that we’re living longer. The bad part — we’re living longer.

The average 65-year-old can expect to live into his or her mid-80s, according to federal statistics. That means you will need a lot of cash to see you through the golden years.

However, if you make many — or any — of the following mistakes, you might not ever have enough to retire comfortably.

1. Taking Social Security early

broke senior
Lena Evans / Shutterstock.com

Will Social Security be your primary source of income in retirement? If the answer is “yes,” you better think twice about taking benefits when you turn 62 — the earliest age at which you can claim them.

If you were born in 1960 or later, claiming at age 62 instead of waiting until you reach what the Social Security Administration considers your full retirement age (about 67) could mean receiving $300 less a month. On the other hand, waiting until as late as age 70 could mean an even bigger monthly check.

There are times when it does make sense to take your benefits early. Maybe you have no choice if you are too seriously ill to keep working, for example. Or, maybe you believe that you’re unlikely to live decades longer.

But think it through. If your parents lived a long time and you are likely to do so as well, starting to collect Social Security early — when the payment is smallest — means you could be scrimping for a long time.

For more, check out “2-Minute Money Manager: Should I Wait to Take Social Security?

2. Being too ‘safe’ with your savings

Monkey Business Images / Shutterstock.com
Monkey Business Images / Shutterstock.com

Stashing retirement cash in a savings account or money market account sounds safe. And it does avoid the risks of the stock market. But it invites risk from another source: inflation.

If prices soar, your expenses might quickly swamp your savings.

So, as you approach retirement — and even after you’ve actually given up working — at least some of your money should be in the stock market or real estate investments. Otherwise, there is a good chance that cash is losing value.

Check out “9 Tips for Sane, Successful Stock Investing” for more ideas on growing your money.

3. Banking too much on retirement calculators

wavebreakmedia / Shutterstock.com
wavebreakmedia / Shutterstock.com

Retirement calculators are fun — for some of us, anyway. They give a sense of control over a difficult problem as you play with numbers and run “what if” scenarios.

But as Money Talks News founder Stacy Johnson has pointed out, online calculators often are sales tools used to lure readers into making a purchase. What’s more, they offer a false sense of security unless you see them as just one tool among many.

Rely on these calculators too heavily and you can badly miscalculate what your real needs will be in retirement.

So, take a more intelligent approach by digging in and reading all you can about saving and investing for retirement. Start with “7 Tips for Stress-Free 401(k) Investing” for some basic rules on retirement investing.

4. Failing to know what your fixed expenses will be in retirement

Casper1774 Studio / Shutterstock.com
Casper1774 Studio / Shutterstock.com

If you don’t understand what your monthly expenses will be in retirement, you might be in for a rude shock once you actually get to your golden years. In fact, you might find your expenses much higher than anticipated — forcing you out of retirement and back into the workforce.

So, before you retire, tally your expenses. To do this, add up your fixed monthly costs — including rent or mortgage, utilities, food and transportation. This roughly tells you the minimum amount of money you’ll need to get by.

Then, figure your minimum income. You can use the Social Security Administration’s Retirement Estimator to get a rough idea of what you’ll receive each month in benefits. To get a better idea, check out “Maximize Your Social Security.”

5. Spending your savings on optional stuff

Ruslan Guzov / Shutterstock.com
Ruslan Guzov / Shutterstock.com

A financial windfall — an inheritance, an insurance settlement or proceeds from the sale of a business — can be a golden ticket to a richer retirement. But not if you blow the money.

Spending your windfall on fancy cars or boats, exotic travel, or even simply eating out too often in fancy restaurants can burn up cash that would serve you better if it was tucked away in a retirement account.

Want your golden years to shine? Cut back on the extras right now.

6. Having no plan to cover income gaps

a katz / Shutterstock.com
a katz / Shutterstock.com

Once you retire, you might unexpectedly find a big gap between the money you need and what you have. Do you have a plan in place in case this happens? If not, you might be forced to return to work.

If you find yourself in this situation, get creative. It’s possible that you can earn enough income from side gigs or other ventures so that you won’t have to return to full-time work.

Check out some of these ideas for making a little extra money on the side:

7. Failing to keep your eye on the ball

Monkey Business Images / Shutterstock.com
Monkey Business Images / Shutterstock.com

Planning for retirement is not a set-it-and-forget-it kind of job. Keep running your calculations and planning ways to stretch savings and cut expenses in retirement.

Don’t constantly worry about your rate of return on investments, or try to time the market. If you are an investments worrywart, consider finding a cheap robo-adviser firm. Some of these firms even offer human advisers to help with some of the decisions.

What’s your approach to retirement planning? Share thoughts and advice in the comments below or our Facebook page.

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