You CAN Reach Retirement! Avoid These Top 5 Retirement Mistakes

Wondering what retirement mistakes will ruin your retirement? Here are the biggest retirement mistakes we all make. Have you ever checked in to see if you are on track for retirement? I know this can feel like a daunting task, but preparing yourself for retirement can help you save more and avoid common retirement mistakes….

Michelle Schroeder-Gardner

Last Updated: November 9, 2020

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retirement mistakes

Wondering what retirement mistakes will ruin your retirement? Here are the biggest retirement mistakes we all make.

Have you ever checked in to see if you are on track for retirement? I know this can feel like a daunting task, but preparing yourself for retirement can help you save more and avoid common retirement mistakes.

For some, retirement means quitting their job after 40+ years, but it can also mean working towards early retirement, in your 20’s, 30’s, 40’s, and so on.

I know that’s not for the “average” American, but by avoiding some of the retirement mistakes I will talk about today, you can start preparing for retirement at any age.

Related: How To Save For Retirement

The thing about retirement is that sadly many out there are not saving enough money. In fact, according to Zacks Investment Research, 72% do not save enough for retirement each month.

Also, according to surveys done by Bankrate, 20% of people aren’t saving any money, and 61% of Americans have no idea what they will need to save for retirement.

These numbers are very alarming.

Saving money in general is an important thing to do, but if you don’t want to work for the rest of your life, saving for retirement should be something that you are thinking about. And, I believe that saving for retirement is possible if you start working towards it and avoid retirement mistakes when it comes to planning and saving.

While many believe the economy ruins their chances for retirement, in reality most retirement mistakes come from specific beliefs people have about retirement. Some of these beliefs come from expectations of what their budget will be during retirement, that they can rely on their pension or social security, and more.

There are many reasons for why a person might not be saving for retirement, and by looking at the various retirement mistakes you might be making, I feel that more people can be aware of and overcome their retirement preparation problems.

Here are five retirement mistakes and how they might be hurting your chances for retirement:


1. You ignore saving for retirement altogether.

Many people skip out on saving for retirement for several reasons, including:

  • Believing you don’t have enough money to save for retirement.
  • Thinking that you’re too young to care about retirement or that it’s too late to start.
  • Relying too much on pensions and social security.

No matter how young or how old you are, you should be saving and preparing for retirement. You never know when you will need it, and I am all for a person being in charge of their own retirement plan instead of relying too much on other sources of retirement (such as relying on social security 100%).

Millennials are especially at risk and according to an article by Business Insider, a shocking 40% of millennials have nothing saved for retirement. This is a scary number because these people will all have to retire one day and I’m not sure what they will do when the time comes.

But, it isn’t just young people who aren’t saving for retirement. Bankrate found that only 60% of people aged 45-54 have some type of retirement savings. You can read more crazy retirement statistics here.

It is important to realize that part of the reason for these low savings rates is that many are currently living paycheck to paycheck, which makes it hard to even approach saving for retirement. Fortunately, you can start investing with very little money, and you can learn how to start investing for beginners if you are wanting to start planning for retirement.

There is never a bad time to start saving for retirement, and you can correct this retirement mistake by starting today.

Side note: I highly recommend that you check out Personal Capital if you are interested in gaining control of your financial situation. Personal Capital allows you to aggregate your financial accounts so that you can easily see your financial situation. You can connect your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more. And, it’s FREE!


2. You take on debt for others and don’t think about your future.

I talked about this topic in the post Should I Ruin My Retirement By Helping My Child Through College? This is a hard thing for a lot of parents especially as student loans are out of control, and I am hearing from parents nearly every week saying that they cannot afford to retire because they are paying for their child to go to college.

If this is your situation, I want you to STOP making this one of your retirement mistakes. Unless you are on track for retirement, I honestly think you need to seriously start prioritizing your future. Your child will be fine without your monetary support.

There are lots of ways to support your child through school that don’t involve leveraging your future for their education. You can help them find a job, find scholarships, be an emotional support, and more.

You can take out loans for college, but you cannot take out loans for retirement.


3. You think you’ll never have to retire.

Recently, I read an article about someone who made hundreds of thousands of dollars a year, had a monthly budget of around $30,000 (yes, MONTHLY!), and yet hardly saved anything. This person said they didn’t really feel the need to save for retirement because they enjoyed their job so much. That’s just crazy!

See, even wealthy people make retirement mistakes.

Assuming you will love your job forever can be a huge mistake. While it’s great that you love your job now, it’s hard to judge what you will love decades down the line.

Also, you never know if something will come up in the future that will completely prevent you from working, such as a medical issue or some sort of major life change. Beyond realizing that you will need to prepare for retirement, an emergency fund should be something you already have or are working on – emergency funds are there to protect you from the what-ifs.

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4. You miscalculate how much money you’ll spend in retirement.

For some reason, many people just assume they will spend less money in retirement, but that is not always the case.

While you might find some ways to save money on things like commuting expenses, work clothes, lunch if you weren’t bringing it, you will probably experience a very similar budget to the one you had while working.

You are still going to spend money on housing (even if you pay off your home completely, you will still need to pay property taxes, utility bills, etc.), food, clothing, entertainment, and so on.

Many retirees also take up new hobbies or activities. And, some retirees just have more time to pursue things they’ve already been doing, which can add up to a lot of extra expenses.

Plus, medical expenses may come up, you might decide to travel more, and like I said, the truth is that retirement spending is not usually much different than what you are currently spending.

Some make plans to become super frugal after they enter retirement, but life doesn’t always work out so perfectly. To make sure this isn’t one of the retirement mistakes you are making, I recommend starting to cut down your budget now.

By living frugally before you retire, you will be able to save more, will have less expenses going into retirement (the less money you spend, the less you need in the future), and you might even reach retirement sooner. Really, if you cut your spending now and become more frugal, you will be used to living with less. I’ve been living a more frugal and minimalist lifestyle since we moved onto our boat, and it can be a life changing thing.


5. You use your retirement funds for expenses other than retirement.

This is one of the worst money mistakes out there, and unfortunately many young people are making it. I’ve actually heard far too many stories about people taking money out of their retirement funds in order to pay for a vacation, a timeshare, pay off low interest debt, and more.

When preparing for retirement, this is a HUGE mistake.

While I don’t know everything about taking money out of retirement funds, I do know that this can usually hurt you more in the long run. Taking funds out of a retirement account can lead to large penalties and paying extra towards taxes.

The other thing about saving for retirement is that the longer you have funds invested, the more you will have for retirement. Compound interest is a powerful thing, and if you are taking money out of your retirement account it means that you don’t get the full benefit of it.

You should always just use your retirement funds purely for retirement. If you are struggling with debt or need help differentiating between wants and needs, it’s time to make a change. Don’t wreck your future by making this huge retirement mistake.

What retirement mistakes have you seen? Do you think you will have enough money to retire and how are you preparing for retirement? What age do you expect to retire?

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Michelle Schroeder-Gardner

Author: Michelle Schroeder-Gardner

Hey! I’m Michelle Schroeder-Gardner and I am the founder of Making Sense of Cents. I’m passionate about all things personal finance, side hustles, making extra money, and online businesses. I have been featured in major publications such as Forbes, CNBC, Time, and Business Insider. Learn more here.

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  1. I think that for a certain period of time, retirement expenses can be similar to pre-retirement expenses. However, as we age our medical and healthcare costs usually rises. And for some people, they rise A LOT! And it’s hard to know if you’re going to be one of the lucky ones with low health-care costs (genetics and family history do play a part) or high costs.
    So it’s important to have good health insurance and long-term nursing care insurance.
    It’s also critical to take preventive measures like eating wholesome healthy food and exercising regularly to keep your body as strong as possible. These steps can significantly improve your quality of life as you age.

    1. Yes, having good insurance is so very important.

  2. Lydia

    Very helpful look at retirement! As a millennial, I am already saving and investing for retirement. Like you said, time is on our side with investing and that is a powerful tool. From various cases I have seen and read about, saving money seems to be a huge struggle for many people. Even with numerous budgeting tools and courses, many people choose not to save. Looking at the realities of life as well as evaluating your mindset towards money and saving can be a great starting point for making a plan for retirement. Thanks for the info!

  3. Bobbie – A Dollar Earned

    These are very helpful tips. Saving for retirement is so hard becuase we thing we have so much time and can just do it later.. wrong! Compounding interest is our best friend and we need to get satisfaction from watching our money grow. But it is so hard to let our money go! Great article!

    1. Yes, compound interest is amazing!

  4. Brett

    Great article! Sometimes we forget to worry about our future self when we worry about ourself in the here and now… Sadly I see how it has effected my parents for me to realize how important it is to prepare now when it should have started yesterday! Thank you!

  5. Great article. I just watched a video the other day about two ladies in their 50-60’s who can’t retire because of student loan debt. One was a PLUS parent loan for a son and the other was her own. That interest is no joke. I am guilty of wanting to be in denial about retirement sometimes and hoping I’ll have enough, however I am not guilty of any of the mistakes on the list. I save. I have a 403b and pension. I’m aware. I’m smart with my money. I’m doing what I can.

  6. Good morning Michelle,

    Just getting around to catching up with things online. I’ll double back momentarily to share valuable feedback on this post. 🙂

  7. These are some helpful tips! Retirement is something that everyone should be thinking about even millennials. We cannot rely on social security and pensions we have to do more!

  8. Stephen @

    Earlier this year I pulled some principal out of my Roth to pay off a credit card. I definitely regret the decision and it helps motivate me to fill it back up and then some.

  9. My brother is at #1 – he just says he will work until he dies. I’m at #2 – most of my debt is because I felt bad and cosigned for others. Big mistakes

  10. Cara Brewer

    It’s really a great article. We all made such mistakes. We actually have a community of work at home moms and most of them are either transcriptionists or want to become one. This should be a great share to them. I really appreciate your efforts for creating such an informative piece. Thanks!

  11. Ronald

    Very good article! We have made a couple of mistakes and learned from them. Now we are on a good track. Thanks!

  12. catching fire now

    It is sad to hear so many people aren’t saving for retirement, especially millennials. They have so much time on their side to compound returns. I recommend at least getting your company match on your 401K.

    1. Company match is a no brainer! I wish more people took advantage of that.

  13. FIbythecommonguy

    Good reminder to keep your eyes and ears on the prize. Referring to #3, I cannot imagine making hundreds of thousands a year, a monthly budget of $30,000, and having little to no savings. Absolutely mind boggling.

  14. Kris

    I am definitely making the most of my retirement savings by maxing out my 401K and Traditional IRA contributions. Also thinking about opening a Roth IRA as well but I think as long as you have these types of retirements available you should take advantage and contribute as much as you can. I didn’t realize how important it is to do this until I hit my 30s, kind of regret taking it for granted in my 20s but as long as I recognized it, I think that what matters the most.

  15. Retirement used to be something to look forward to, but for me, it’s something I’m genuinely afraid of! What if I don’t have enough money? What if I can’t take care of myself?

    I think things were a bit different in the past, when a family unit would stay together for a lifetime, and parents would live with their kids (and it was expected). Your money was the family’s money. I’m not saying it was better back then – just different – and less stressful I would imagine.

    Preparing for retirement by yourself can be stressful, but FIRE blogs, budget blogs, and MMO blogs like yours here are doing great work educating people on how to properly prepare.

    I enjoyed the read today guys. Thanks.


  16. I love your observation, Michelle, “You can take out loans for college, but you cannot take out loans for retirement.”

    Best to avoid debt altogether, or pay debt off as fast as possible, then take those same debt payments and add them to retirement accounts.

    Since I didn’t save enough when I was younger, I’m maxing out all my tax-advantaged retirement accounts and coming up with as many creative ways I can think of to catch-up my retirement savings now.

  17. It is a very useful article. Thanks for sharing the information with us. We all have make mistakes and we can only learn from them to keep our finances under control. Retirement planning is very important for securing the future. Start early and save as much as you can is one of the best advice I have got.

  18. Ronaldo F. Silva

    The biggest mistake is simply waiting for the government of your country, especially if it is third world (Brazil).