5 Money Habits That Hurt Your Retirement, According to Experts

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Planning for retirement isn’t just about how much money you make. It’s about how you manage it over the years. Certain financial habits can quietly sabotage your long-term goals even if you earn a great salary. 

We asked financial experts to share the most common mistakes they see people make that can delay or even derail retirement plans. From lifestyle upgrades to poor car-buying decisions, these habits may be more familiar than you think.

Always Leasing Instead of Buying a Car

A car is often one of the biggest purchases we make, but how we buy it can impact our financial future more than we realize.

“If you choose to always lease a car, you will always have a car payment,” said Melanie Musson, a finance expert with Clearsurance.com. “You’ll never reach a point where your car is paid off and you can take what you were making in a payment and put it toward investing.”

Musson broke down a hypothetical scenario where if you leased a $60,000, you may enjoy the ride but after three years, you’d walk away with nothing. On the other hand, if you buy a $30,000 used car with $600 monthly payments, you’ll eventually own the vehicle outright, and you can use the money you were paying toward another expense or savings goal.

“Pay it off in five years and redirect that $600 into investments instead,” said Musson. “Over 20 years, and with an average 8% return rate, that decision alone could grow into $100,000 to $300,000, depending on market performance.”

Lifestyle Creep That Grows With Your Income

Getting a raise is exciting, but it can also be dangerous if it fuels unchecked lifestyle upgrades.

“Lifestyle creep is sneaky because it doesn’t feel like overspending, it feels like celebrating success,” said Melissa Cox, CFP and owner of Future-Focused Wealth.

“A raise turns into a nicer car, a bigger house, or just more DoorDash orders… but none of it gets funneled toward the future,” she added.

It’s easy to fall into the trap of spending every new dollar you earn. But without increasing your savings rate, your expenses can outpace your retirement contributions. That gap only gets harder to close over time.

Making Costly Real Estate Moves

Your home can be one of your most valuable assets. Or, it can be a financial setback depending on how you handle it near retirement.

“One thing that can hurt your retirement is not making the best real estate moves,” said Adam Hamilton, CEO of REI Hub.

“Maybe you’re retiring soon, but decide to buy a more expensive home and take on a new mortgage just as you exit the workforce. Or maybe you downsize, but don’t time it well and end up with a much higher mortgage rate than what you previously had.”

Hamilton also points out missed income opportunities.

“If you already own a vacation home, consider renting it out during the months you’re not using it. It could generate a lot of income that supports your retirement lifestyle.”

Whether to upgrade, downsize, or rent out housing decisions should be part of your long-term financial plan.

Not Saving or Investing Early Enough

Time is one of your most powerful tools when it comes to saving for retirement. But too many people wait until later in life to get serious.

“The biggest mistake I see is people not starting early,” said Jason Butler, personal finance blogger at My Money Chronicles.

“I know what it’s like to feel like you’re drowning in debt. Student loans were a huge burden for me. But even while I was paying those down, I made it a point to start saving something, even if it was just $50 a month.”

Butler’s strategy involved combining a consistent debt repayment plan with automated contributions to retirement savings accounts. He also made sure to avoid using credit too much so as not to add even more payments that could drain his financial ability to save.

“I used windfalls like tax refunds or side hustle income to pay down debt faster and still made room in my budget for retirement investing,” he said. “The key is to start where you are and stay consistent.”

If you’re feeling behind, it’s not too late to start. But the longer you wait, the more aggressive you’ll need to be with saving and investing.

Treating Retirement Like a Bottomless Checking Account

Even if you do everything right during your working years, such as saving consistently, investing wisely, and avoiding debt, retirement requires just as much strategy.

“Too many retirees treat their nest egg like it’s never going to run out,” said Cox. “Without a withdrawal strategy, people end up pulling too much too soon or ignoring tax implications.”

A proper withdrawal plan can help you avoid unexpected tax bills, Medicare premium hikes, or even running out of money. Working with a financial advisor or using a “bucket strategy” — dividing retirement funds into short-term, mid-term, and long-term buckets — can provide peace of mind.

Small choices today, like the car you drive, the house you buy, or how you handle a raise, can ripple through the decades into your retirement years. But with awareness and smart planning, you can sidestep these costly habits and create a retirement that’s both possible and enjoyable for you.

Sources:

• Melanie Mussion, Clearsurance
• Melissa Cox, Future-Focused Wealth
• Adam Hamilton, REI Hub
• Jason Butler, My Money Chronicles

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