7 Deadly Sins of Retirement Planning: The Worst Mistakes People Make

Getting ready for retirement requires a lot of thought and planning. Although you might be excited about your next step in life, it’s important to make sure you’re planning properly. One misstep could significantly hamper your progress. There are some deadly retirement planning sins you would be smart to avoid.

Here are seven mistakes people make when saving for retirement. Are you making one of them? We’ll also take a quick look at some surprising retirement secrets to make the most of your golden years.

1. Pride

money, budget, spending

Always have a financial backup plan. | Paramount Pictures

Don’t be prideful if you’re hitting your retirement savings goals. Although it’s OK to feel good about reaching your goals, don’t get too comfortable. All it takes is an event like an illness or sudden job loss to get you off track. That’s why it’s important to have a financial backup plan. Make sure to have a solid emergency savings fund in place, proper insurance, and a side job to help you stay afloat until your finances get back to normal. This way you can avoid having to take a hardship withdrawal against your retirement account.

Next: You don’t have the luxury of getting angry.

2. Anger

Sad man looking at his wallet

Don’t let anger hamper your progress. | SIphotography/iStock/Getty Images

Since most companies don’t offer defined benefit pension plans anymore, most employees are on their own when it comes to padding their retirement nest egg. Consequently, you might be angry about having to save for retirement. However, you don’t have the luxury of getting angry. This will only cause you to delay getting started. Instead, use all that energy to build a solid savings plan. A certified financial planner can help you get on the right track.

Next: More isn’t always better.

3. Gluttony

Person Hand Inserting Coin In Pink Piggybank

Don’t forget your old retirement accounts. | AndreyPopov/iStock/Getty Images

More isn’t always better. It’s not uncommon to have several retirement accounts, especially if you’ve changed jobs a couple of times. However, it’s not a good idea to leave your retirement accounts behind when you make your exit. It’s just too easy to forget about them. Instead, your best bet is to do a rollover. And, as tempting as it might be, don’t cash out and take a lump sum. That’s because you’ll be hit with a 10% early withdrawal penalty in addition to income taxes on the money you receive if you’re younger than age 59½.

Next: Don’t let a smaller paycheck scare you.

4. Greed

Man in suit with falling money

Don’t be greedy. | Dean Drobot/Getty Images

You might not be saving as much as you could because you don’t like seeing a smaller paycheck. Sure, it feels good to see a bigger paycheck, but failing to contribute to your retirement account is not going to serve you well in the long run. If your employer offers to match your contributions, make an effort to at least save up to the match so you don’t leave free money on the table.

Next: Divorce is the real retirement killer.

5. Lust

woman in red dress looking at her lover in suit and tie

Lust will get you in a lot of trouble. | feedough/iStock/Getty Images

This sin is especially important to keep in check if you’re married. If your lust gets out of control and your marriage ends, you could find yourself with a lot less money during your golden years. Depending on how long you were married, your spouse could be entitled to some of your retirement savings. All your spouse has to do is request a qualified domestic relations order. A qualified domestic relations order can be filed even if it has been a couple of years since the divorce took place.

Next: Think of your future self when this sin enters your mind.

6. Envy

sad woman in front of computer

Keep the green-eyed monster at bay. | iStock.com/anyaberkut

You might think you would be happier if you could spend the money you’re saving for retirement and enjoy life now, but that’s not the case. Think of your future self whenever you get a case of the envies. Everyone’s financial situation is different, so don’t compare yourself to others. Chances are, the people you’re jealous of are deep in debt because they’re living a borrowed lifestyle. Delay your wants for today so you can live comfortably tomorrow.

Next: Spend a little time to do these important things.

7. Sloth

Breaking Bad characters lying on a pile of money.

Avoid a set-it-and-forget-it approach. | AMC

Don’t get sloppy when it comes to monitoring your progress. It’s important to avoid a set-it-and-forget-it approach. That means you’ll need to take time to check your retirement account statements. Make sure the correct amounts are being withdrawn and deposited into your account. Check to make sure the withdrawal amount listed in your pay stub matches the amount on your retirement statement. If the amounts are less than what you see on your pay stub under the retirement contribution section, this could be a sign your employer is engaging in retirement account theft. Be alert.

Next: Surprisingly simple secrets to a happy retirement.

Find your purpose

teacher with students

It helps to keep busy during retirement. | iStock.com/monkeybusinessimages

Retirement frees up your schedule, and for some people, all that unstructured time is a little overwhelming. If you’re not careful, an absence of purpose can lead to boredom, depression, and relationship stress. That can be especially true for people whose identity was closely tied to their career.

You can avoid this source of retirement unhappiness by thinking about what your retirement purpose will be before you stop working. That might mean setting yourself up to start a business, looking into volunteer work, or even turning a spare bedroom into an artist’s studio.

“It can’t be cold turkey. You’ve got to really envision the things that will make you happy, what they will be,” Andrew Rafal, president and founder of Bayntree Wealth Advisors and co-author of Climbing the Retirement Mountain and Getting Safely Down the Other Side, said in a phone interview with The Cheat Sheet. “There’s only so much golf you can play.”

Next: Don’t let the Joneses trick you.

Don’t try to keep up with the Joneses

shopping for a boat

Don’t worry about keeping up when it comes to luxury purchases. | Carl Court/Getty Images

Pressure to keep up with your friends and neighbors when it comes to vacations, home improvements, and hobbies can derail your retirement finances — and your happiness.

“I think the one thing a retiree has to be careful of is to not keep up with that proverbial Joneses,” Rafal said.

If you’re running in a social circle where people tend to live large and you can’t — or don’t want to — deal with the pressure to keep up, you might need to refocus your energy elsewhere.

Next: Lower your risk of heart disease by doing this.

Stay social

retirees at an outdoor dance

A healthy social life is key to a happy retirement. | Rhona Wise/AFP/Getty Images

Not having much of a social life can be bad for your health. Studies have linked low social interaction with a greater risk of heart disease and an increased risk of cognitive decline and dementia, according to a Merrill Lynch report.

To stay happy and healthy in retirement, make time to develop new relationships and nurture existing one, especially if your social life previously revolved around work.

“The happiest [people] keep their friends and family, that connection around,” Rafal said. “Those that don’t have as much of that connection, you can tell that it’s definitely wearing on them.”

Next: Think twice before doing this.

Think twice before relocating

moving van

Moving may not be the answer. | Spencer Platt/Getty Images

Picking the wrong place to move is one of the biggest sources of retirement unhappiness, Rafal said.

“I think if somebody chooses the wrong geographic location, that can really weigh on you,” Rafal said. “We’ve definitely had people that have chosen to move [to Arizona], and they’re just unhappy, so they’ve then got to figure out where they are going to be happy.”

Choosing a location because it has a low cost of living or you love to vacation there without considering other factors — such as whether you’ll enjoy the community or have friends or family nearby — can be a mistake that’s expensive to undo. In fact, pulling up stakes without considering all the consequences is one of people’s biggest retirement regrets.

Next: Be thankful for what you have.

Be satisfied with what you have

A smiley face sign

A well-planned retirement helps lead to happiness down the road. | Arno Burgi/AFP/Getty Images

Your retirement nest egg might not be quite as large as you hoped it would be, but that doesn’t have to mean spending your golden years in misery. Assuming you have enough to live comfortably, there are plenty of ways to enjoy your retirement, even if you can’t afford all the luxuries you might have dreamed of.

“I think it’s coming to terms with really what makes you happy,” Rafal said. “For a lot of individuals, they don’t need a ton of money. They live well within their means [while understanding they] can’t go on three cruises a year.”

The key is to refocus on what you do have, whether it’s your health, family, or hobbies, and not stress too much about what you might lack. Once you come to terms with your own retirement reality, you’ll be on your way to retirement happiness.

Follow Sheiresa on Twitter @SheiresaNgo.

Additional reporting by Megan Elliott.

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