Retirement Planning: 12 Mistakes You’re Making Everyday but Shouldn’t

Are you really ready for retirement? Your golden years may seem like forever away, so you might not have given it a second thought. However, your retirement is a lot closer than you think. Before you know it, you’ll look up one day and 30 years will have gone by. Don’t be taken off guard.

One way to stay on top of your retirement savings plan is to take a look at your daily habits. Small actions that you don’t pay attention to can add up to big problems years down the line. It pays to take a moment to examine your money management habits now before they get out of hand.

Are you ready to take the reins and get in control of your financial future? Start by minding your habits. Here are 12 daily habits that could be sabotaging your retirement. If you’re young, you might really be guilty of No. 10.

1. Lack of exercise and poor diet

Woman looking at a pink frosted donut

That donut looks good now, but it could lead to clogged arteries and heart disease | iStock.com/YakobchukOlena

Not taking care of yourself could cause you to develop a disease that leads to disability, premature death, or both. If you become disabled before you’re ready to retire, this could significantly impact your nest egg. You won’t have nearly enough to be comfortable.

If you think your chances of becoming disabled before you retire are low, think again. The United States Social Security Administration estimates approximately one in four of today’s 20-year-olds will become disabled before they have a chance to retire. Furthermore, more than 50% of those who are disabled are of working age (from 18 to 64 years old), according to the U.S. Census Bureau.

2. Neglecting your marriage

Couple argues while sitting on a white couch

Just keep on fighting — it’s just a matter of time before he gets dibs on your retirement savings | iStock.com/AndreyPopov

Have you and your spouse hit a rough patch? Not treating your spouse well could eventually lead to divorce. But that’s not all. You could also be risking your retirement nest egg.

What you may not know is that depending on how long you were married for, your spouse could be entitled to some of your retirement savings as part of the divorce settlement. All your spouse has to do is seek a qualified domestic relations order (it’s called a court order acceptable for processing if it is a retirement plan for federal government employees). Keep this in mind if there’s been trouble in paradise. And if you’re already divorced, don’t think you’ve dodged a bullet. A qualified domestic relations order can be filed years after a divorce has taken place.

3. Holding on to clutter

Young couple moving boxes into their new home

Are you hiding cash in your home? | iStock.com/monkeybusinessimages

If you have tons of clutter sitting in your home or garage, you could be missing out on an opportunity to earn some quick cash. Why not hold a garage sale or sell your stuff on sites such as eBay or Amazon? You may have chosen to move some of your clutter to a storage facility, but that’s not such a smart money move. Bankrate reports that one in 10 Americans are paying $20 to $300 per month to store unused items at a storage facility. This is cash that could be invested in a retirement account.

4. Paying unnecessary monthly fees

A young woman is worried by what she sees on her phone

You forgot about that magazine subscription, didn’t you? | iStock.com/nandyphotos

Do you pay for magazine subscriptions that you don’t even read? Are you coughing up cash each month for a gym membership that you forgot you even had? How about clutter: Is all your old furniture from your first apartment collecting dust in storage space? Instead of paying high monthly fees, you could be stashing this cash in your retirement account. Take stock of all your subscriptions and membership fees to see where you could be tightening up your budget. You’d be amazed at how much more you could be socking away for your golden years.

5. Being greedy

A young woman uses her mobile phone in a store

It’s time to go on a financial fast | iStock.com/imtmphoto

Do you really need that big house, three cars, and a fancy wardrobe? Buying more house than you need or owning too many cars can devour your cash in no time. Downsize your lifestyle now so that you can have a better retirement later. It’s the small sacrifices that make a big difference.

Before you can downsize, though, you need to figure out your priorities and examine whether your purchases are bringing you closer to or further away from your money goals. If certain purchases are just money drains, you have your answer. Instead of enjoying all that extra space in your big house, think about renting out a room and earning additional income.

6. Being lazy

A man sleeping on the couch with his mouth open

Get up and get some motivation | iStock.com/txking

Do you hate to work? If you can’t keep a job because you have a poor work ethic, or if you’re just lazy and don’t want to work, good luck when it comes time to retire. Take an active role in building your wealth. No one is going to do it for you. Learn the basics of personal finance, understand the importance of wealth creation, and get motivated. Don’t wait until it’s too late.

7. Not contributing to your employer’s 401(k) match

Woman takes money out of her wallet

Don’t leave money on the table | iStock.com/dolgachov

Turning down free money sounds crazy, doesn’t it? Well, that’s exactly what you’re doing when you don’t contribute enough to receive a contribution match from your employer. It’s in your best interest to contribute at least the minimum required to receive the 401(k) match. Otherwise, you’re leaving free money on the table. This one simple move can significantly boost your nest egg. Go get your money.    

8. Relying on credit

A man makes a purchase with his credit card

Instead of credit cards, use an emergency savings fund to make ends meet | iStock.com

Relying too heavily on credit will cause you to dig yourself deeper into debt. Unless you pay off your balance in full each month, you’re asking for trouble. Credit cards should be used for emergencies or to cover purchases that must be secured in advance, such as a hotel room. A credit card isn’t the best choice when it comes to bridging a financial gap (an emergency savings fund is the best choice). All the money you’re spending on monthly interest charges could be going toward retirement savings.

Work toward paying down high-interest debt. You can do this by cutting back on spending and using the savings to make additional payments or you can get a side job. Do what you can to chip away at credit card debt before it gets out of control. If you can no longer keep up with payments, it’s time to call your credit card issuer. You may also benefit from speaking with a certified credit counselor.

9. Not saving for emergencies

A woman puts a coin into her pink piggy bank

You’re just one emergency away from financial disaster. Save now for a rainy day | iStock.com/dolgachov

All it takes is one unforeseen emergency to wreck your finances. Without an emergency fund of at least three to six months of expenses, you could be in a position where you have no other choice but to tap your retirement savings a lot sooner than you had anticipated.

Although a hardship withdrawal could provide temporary relief when you’re faced with a major financial emergency, there are plenty of drawbacks. One drawback is that you’ll usually have to wait at least six months after you receive a hardship distribution before you can resume contributions. Unfortunately, you will lose the value of having your money invested in the market.

10. Not saving for retirement

A piggy bank sitting on dollar bills

Save now for your golden years | iStock.com

Another sure way to derail your retirement is not saving at all. If you’re young, you might think you don’t have enough money or that you can always save later. However, now is the best time to save because you do have time on your side. When you start saving for retirement early, you can benefit from compounding interest over time. If you start saving too late, it will take a lot more money to catch up to where your retirement savings should be.

11. Eating out often

A woman eating a fruit tart

Eat at home more often to save money | iStock.com

It’s OK to enjoy a night out with friends every now and then. However, if you’re eating out most nights of the week, you’re slowly chipping away at cash that could be set aside for retirement savings. Try eating at home more often and redirecting the extra cash toward savings. The Frugalwoods, husband-and-wife personal finance bloggers and owners of the Frugalwood website, suggest creating a meal plan so that you don’t give in to eating out.

12. Not looking for deals

Woman carrying many shopping bags on a city street

Stop mindless shopping and put more thought into when and what you buy | iStock.com/Artem_Furman

When you need to buy something, do you just go out and purchase what you need? That’s a big mistake. You could be losing out on major savings by not paying attention to sales or using store coupons. You could save hundreds of dollars each year by making an effort to time your purchases and hunting for discounts. That’s additional cash that could be keeping your retirement nest warm and toasty.

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