10 Signs You’re Not Saving Enough for Retirement

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Retirement might be decades away, but it’s never too soon to start saving for your golden years.

Setting aside money now gives you the opportunity to collect interest, so you can maximize your savings. Even if you’re already saving money for retirement, you still need to make sure you’re stashing the right amount of cash.

Click through to read more about considering an early retirement plan.

See: How To Build an Emergency Fund Using Your Retirement Investment Accounts
Find: Should I Save More for Retirement or Put Money Toward a Down Payment?

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1. You Don’t Know Your Savings Rate

If you don’t know how much of your income you’re saving for retirement, that’s a huge red flag.

You should know your savings rate — which is typically calculated by dividing the amount in your savings by your annual income — and be trying to increase it every year. The lower your savings rate, the less money you’ll have to last you through your golden years and the less you’ll have to afford all of the necessities you’ve grown accustomed to.

According to the U.S. Bureau of Economic Analysis, the average American saved just 5.5% of his or her disposable income as of November 2017. However, experts at financial services firm TIAA recommend saving 10 to 15% of your income for retirement.

See: 50 Things Every 50-Something Should Know About Retirement

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2. You’re Spending Too Much of Your Income

Again, the general rule of thumb is you should be saving at least 15% of your income for retirement.

But if you’re having trouble saving more of your income, take a look at your spending habits and see if you need to cut back. You might find that you’re spending too much of your take-home pay on little things that can add up, such as going out to lunch three times per week.

Once you get your paycheck, make sure you put 15%– or 10%, if 15% is too much — into your retirement savings account. Then, divide the rest of your take-home pay between an emergency fund and other expenses you’re planning to incur in the future.

Find: The Downsides of Retirement That Nobody Talks About

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3. Paying Medical Expenses Is a Struggle

You might have a few medical bills now, but you’ll likely have more as you get older. So, if you’re having a hard time finding the money to pay for your current medical bills, you’ll probably have an even harder time paying medical expenses when you enter retirement.

Start saving money now. You don’t want to have to worry about not being able to pay hospital bills in the unfortunate event that you get sick or injured during retirement.

Be Careful: 30 Greatest Threats to Your Retirement

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4. You Have Credit Card Debt

Whether you’re currently living off your credit cards or trying to get out of credit card debt, there’s a good chance you’re not focused on retirement. Examine your spending habits, and create a budget to start living within your means. Then, devise a plan to start paying off debt and saving for retirement.

In some cases, it might make sense to focus on saving money for retirement first. Or, the opposite might be true: pay off debt, and then start saving for retirement. If you’re unsure about where to start, consult a financial planner.

Find Out: Hidden Obstacles That Keep People From Retirement

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5. You Have No Idea How Much Money You’ll Need to Retire

If you don’t know how much you’ll need to maintain your lifestyle in retirement, you’re most likely not saving enough.

You might not know exactly how much you should save down to the last penny, but you should have a ballpark estimate. Not only do you need enough savings to pay for your living expenses, travel and everything else you’re planning to do during retirement, but you’ll also need to account for inflation.

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6. You’re Not Contributing the Max to Your Employer Contribution Plan

If your company offers to match your 401k contributions, contribute the maximum. It’s a quick and easy way to grow your retirement fund and essentially earn free money.

Take advantage of this program if your employer offers it. Otherwise, you’ll regret passing up this opportunity if you find yourself struggling to pay for an expense during retirement.

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7. You Plan on Relying on Social Security

Sure, Social Security can help you pay for expenses in retirement, but you shouldn’t rely solely on this fund. For one thing, the amount of money you receive isn’t that much.

As they say, don’t put all your eggs in one basket. Whether it’s a 401k or an IRA, make sure you have another retirement savings plan in addition to Social Security.

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8. You’ve Borrowed From Your 401k

It doesn’t matter how much money you have put aside in your retirement savings account if you’ve already taken money out of it. Although this withdrawal might have helped you in the short term, it can be detrimental to your long-term financial health in retirement. You’ll need to develop an aggressive savings strategy to get caught up again.

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9. You Can’t Live Off of Your Current Savings for a Few Months

If you don’t currently have enough money saved to last you a few months in case of an emergency, such as losing your job, how do you think you’re going to survive 20 or so years in retirement?

Rather than becoming discouraged, use this realization as a wake-up call to get your financial priorities in order so you can start focusing on your future.


10. You Haven’t Worked With a Financial Professional

Saving for retirement is a major undertaking, so it’s wise to seek counsel from a financial advisor. He or she can review your portfolio to make sure it’s on target to reach your goals, help you plan for inflation and make any necessary adjustments based on your age and desired lifestyle. You probably don’t need to meet with a professional on a regular basis, but checking in once or twice a year will ensure you’re on the right track.

If all 10 of these signs apply to you, don’t freak out — just start planning and saving today. Saving sooner rather than later is preferred, but it’s better to save later than never.

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