14 Greatest Threats That Can Derail Your Retirement Plan
Written by
Caitlyn Moorhead
Edited by
Amber Barkley
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You’ve worked hard and saved diligently, but a comfortable retirement still isn’t guaranteed. Longer lifespans, rising costs and unexpected setbacks can throw even the best-laid plans off track.
To retire securely (and maybe even early), it’s essential to recognize and avoid these 14 common pitfalls.
Financially Supporting Adult Children
Helping your grown kids out is generous and understandable, but if it comes at the cost of your own future, think twice. Teach independence early. Your retirement should come first.
Living in a Home That’s Too Big (and Expensive)
A large home might hold sentimental value, but the maintenance, taxes and mortgage can eat into retirement savings. Downsizing can free up funds and reduce stress.
Rising Medical and Long-Term Care Costs
According to some estimates, retirees can expect to spend over $300,000 on healthcare. That’s a lot. An HSA can help cover future costs tax-free. Also consider long-term care insurance to protect your nest egg from unexpected medical needs.
Unexpected Major Expenses
Emergencies don’t retire when you do. Without a solid emergency fund, one surprise expense could mean serious debt.
Borrowing From Your 401(k)
Tapping your 401(k) early can trigger taxes, penalties and lost growth. If you’re laid off while still repaying a loan, the consequences could be costly.
Under-Contributing to Your 401(k)
Default contributions (often as low as 2%) aren’t enough. Max out your contributions, especially if your employer offers a match — it’s essentially free money.
Saving Too Little, Too Late
Don’t bank on luck or a windfall. Start saving early and consistently, even if that means cutting back on large expenses like college tuition for your kids. They can get student loans — you don’t have retirement loans.
Investing Too Much in One Company
Even if you believe in your company (or another company like Apple), diversify. If the business struggles, your job and retirement savings could both take a hit.
Inadequate Life Insurance
Without proper life insurance, your family could face financial stress if something happens to you. It’s a crucial part of your retirement plan.
No Disability Insurance
An injury or illness can stop your income cold. Disability insurance replaces a portion of your salary so you don’t have to drain your retirement to survive.
Poor Financial Decisions
Don’t chase trends or make emotional investment choices. A “hot” fund today could be tomorrow’s regret. Base decisions on strategy, not hope.
Bad Asset Allocation
A one-size-fits-all investment rule (like “100 minus your age = bond percentage”) may not suit your situation. Reassess regularly and adjust for your goals and risk tolerance.
Unexpected Layoff
Losing a job close to retirement can force you to draw down savings earlier than planned. Always have an emergency fund and consider a side income as a cushion.
Lifestyle Creep & Inflation
Avoid spending more just because you’re earning more. Inflation quietly eats into your savings, so invest in assets that outpace it — and keep your lifestyle in check.
Final Take To GO
Retirement success isn’t just about saving — it’s about protecting what you’ve saved. Recognize the threats early, take action and give yourself the peace of mind you deserve in your golden years.
Roger Wohlner contributed to the reporting for this article.
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