11 Ways You’re Sabotaging Your Retirement


Retirement planning isn’t as simple as it used to be. While many Americans are struggling to set money aside for retirement, those who do save could be mismanaging their funds.

Whether you’ve taken a loan out against your savings or failed to take on enough risk, here are 11 ways you’re putting your retirement at risk.

retirement savings

1. Not Saving for Retirement

According to data from the Board of Governors of the Federal Reserve System, 31 percent of non-retired adults do not have retirement savings. Not starting your savings for retirement is the biggest way that you can sabotage your retirement.

What to Do: It’s never too early to start planning and saving for retirement. Even a small amount saved when you are young can turn into significant savings as you grow older.

borrow 401k

2. Borrowing From Retirement Accounts

Sometimes, people treat their retirement accounts more like an emergency fund.

“The most significant way folks can sabotage their retirement accounts is to withdraw money during a market downturn,” said Chris Alberta, CEO of Senior Benefits Group and Senior Health Direct. “Sometimes, there’s not a choice if income is needed or an emergency arises. Overall, though, the worst possible time to become a spender is when the money needs to be in to recover. Statistically, funds that have not had withdrawals recover losses much faster.”

What to Do: Build an emergency fund so there is less need to borrow from your retirement account when emergencies come up.

make more money

3. Not Increasing Your Earnings Potential

Whether you like your job or feel stuck, your earnings could be holding you back.

The Federal Reserve survey found that only 44 percent of respondents who reported wages lower than $40,000 have any retirement savings. Overall, 27 percent of survey respondents said they’re not investing because they’re unable to afford the expense, and 38 percent expect to continue working through retirement to cover expenses.

What to Do: Brainstorm ways to increase your income. You could improve or update your skills, change jobs or pick up part-time work. You could also get creative and start a side business. Whatever you do, it’s always a good idea to maximize your earnings potential while you are young.

employer contributions

4. Not Taking Advantage of Employer Contributions

An employer might match 401k contributions made by an employee.

“Too often, people assume that employer matching is extra, as opposed to being part of their total compensation package,” said Michael Tove, president and founder of AIN Services. “Not taking full advantage of the offer to match contributions is literally like asking for a salary reduction.”

What to Do: Don’t skimp on free money. Always contribute the amount needed to get the full employer match.

prioritize retirement savings

5. Not Prioritizing Retirement Savings

From car insurance to childcare, a number of expenses will always be tugging at your wallet. As long as you have a paycheck, it will always seem as if there is not enough money.

With so many competing claims on your money, it’s often difficult to give retirement planning the attention it deserves. But there will likely never be an ideal time when you feel you have enough in your accounts, so the best time to cultivate the habit of saving for retirement is now.


What to Do: If you are self-employed or your employer does not offer a retirement plan, look into opening up a traditional individual retirement account or Roth IRA and begin contributing to it.

sell investments

6. Trading Instead of Holding Investments

You’ve likely heard stories about master traders who were able to make millions in the financial markets. And you might dream of being in their shoes and trading your retirement account to make millions. However, even though trading can be lucrative, most people who attempt it ultimately lose because they have not first invested the time to study and master the process.

Trading appears deceptively simple, but it is really difficult to do well consistently. Tove said a sure way to sabotage your retirement account is to try “to second guess the market and [buy and sell] based on what you think markets are about to do. Research has shown that a buy/sell strategy usually underperforms a buy-and-hold strategy.”

What to Do: If you want to trade, open a brokerage account and put a small amount of money into the account for trading. Only if you can consistently outperform a major index, like the Standard & Poor’s 500 Index, should you consider trading with your retirement funds.

retirement advice

7. Not Seeking Retirement Advice

According to a study of the financial habits of affluent investors by TIAA-CREF, most affluent Americans agree they need to seek financial advice throughout their careers and not just when they approach retirement age. Studying the financial habits of affluent investors can help you identify some of the key strategies in building wealth.

What to Do: Seek out fee-only, certified financial planners. Online, you can use the Financial Planning Association to start your search.

saving for college

8. Adding to Your Kid’s College Fund Before Retirement Accounts

You love your kids, and with the rocketing costs of a college education, you want to do all you can to make sure they are not saddled with huge amounts of debt. So, you start a college fund with the goal of freeing them from the burden of student loans. This is well-meaning and admirable, but contributing to that college fund comes at the expense of contributing to your own retirement fund.

What to Do: Remember that your children have more time than you do to pay off loans. They also have access to grant and scholarship opportunities as well as financial aid programs. Do not let your desire to reduce their future indebtedness come at the expense of your retirement nest egg.

retirement debt

9. Carrying Too Much Debt

According to a 2014 study by the Urban Institute, in September 2013 the average total debt per American with a credit file stood at $53,850. Not all debt is bad, such as debt taken on to buy a house or fund a college education. However, there are types of debt that people carry, such as credit card debt, that can burden them far into the future and sabotage their retirement goals.

What to Do: Do not take on debt for consumption. Make a plan to pay down credit card debt, starting with cards charging the highest rates of interest first. As you free up the money used in servicing these revolving loans, make additional payments to your retirement accounts.

retirement planning

10. Being Impatient and Thinking Short Term

People like to see their accounts grow in a linear fashion. But markets rarely move this way. Sometimes, there are market pullbacks, and when this happens, you’ll see declines in your account balances.

Compounding takes time, but people switch in and out of funds too frequently. When “people expect short-term results and seek to judge long-term possibility by artifacts of the short term, they become impatient for results and abandon any long-term strategy,” Tove said.

What to Do: Focus on the long-term and not on short-term results. Don’t go chasing mutual funds based solely on past returns. Remember that investing for retirement is all about taking a long-term view.

Keep Reading: What Retirement Without Savings Looks Like

retirement risks

11. Not Taking Risks Because You Worry About Retirement

Some people fixate on growing their retirement accounts and the years and months left until retirement. This fixation can actually work to the detriment of living life in the present. People might give up on changing jobs, learning new skills, taking risks and opening themselves up to new opportunities because they fear the unknown.

This thinking might go something like this: “If I stay in this job for the next 18 years, I will be able to retire with X amount.” But if the job you are in does not challenge you, or if you are stuck or unhappy in your job, you probably won’t maximize your earnings potential and are almost certainly sabotaging your future happiness.

What to Do: Live in the present but with the future in mind. Seek retirement advice but don’t be afraid to take risks and seek new ventures to ensure you’re making the most of life.

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