10 Things That Can Ruin Your Retirement

Careful planning when you're young may be the best boost for your retirement.

Careful planning when you're young may be the best boost for your retirement.

Being old and broke is worse than just being broke. Young people have a lifetime to earn and turn around a financial disaster, but once you reach retirement age, you must make do with what you’ve saved. You pay into retirement for most of your work life with Social Security taxes, Medicare taxes, retirement savings and pension plans. You can’t control the economy or natural disasters, but you can do your part to save yourself from retirement mistakes.

Ignoring Social Security

The Social Security Administration calculates your retirement benefits on 35 years of employment. If you don’t work 35 years before you retire, you’ll receive less Social Security at retirement. If your earnings are meager during your work life, your Social Security benefits will be similar. According to the Social Security Administration, Social Security retirement benefits cover 40 percent to 50 percent of your pre-retirement income, and you should need 70 percent to 80 percent of pre-retirement income for retirement. Plan for income from another source equal to your Social Security retirement benefits.

Missing Out on Contributions

Your employer may help you accumulate money for your future with matching funds. A study done on 401(k) plans in 2010 by Financial Engines showed that 47 percent of workers under the age of 40 didn’t contribute enough to get the full employer match. Your employer doesn’t match when you don’t pay your share and you lose free money.

Not Saving Enough for Retirement

Save with the same ambition that you spend. Enjoy watching your money grow every year so you can accumulate retirement funds over your lifetime. Develop your own sources for retirement income such as a savings account or a valuable collection in addition to other investments.

Spending Retirement Funds Early

You may look to your 401(k) for a source of money when you need it, but borrowing from your retirement money stops the interest on the borrowed funds. Failure to pay the money back might result in penalties and taxes and will knock you off track for your retirement savings.

Expecting to Live Where You Are

With career moves and family dynamics, don't count on living in the same house all of your life. According to the U.S. Census, the average American moves 11.7 times in a lifetime and the highest mobility rates are found among young people. Expensive remodeling and additions on your current home might get in the way of your financial goals because you might not recoup the costs if you have to move.

Thinking You'll Work Through Retirement

You may think you’ll never quit work, but layoffs and medical conditions get in the way of best-laid plans. You might be able to work until you’re 70 when you get the maximum Social Security retirement benefit, but you may live another 15 to 20 years after that. Even the best employer might get tired of your prune face and gimpy walk and trade you in for younger help.

Planning to Retire at 50

Retirement at 50 can be a dream, but not an expectation. Every year you work adds to your Social Security and your assets and is one less year you live without employment income. Retiring too early may result in outliving your money and limiting your choices.

Failing to Stay Out of Debt

Interest charges over your lifetime represent a large chunk of money you could save for retirement. If you don't have to buy now, save until you can pay cash and skip the interest charges. Make reasonable purchases and skip the extravagances.

Living an Unhealthy Lifestyle

A debilitating condition can ruin your retirement years, both in health and in medical expenses. Take care of your health while you're young to enjoy your retirement. MSN Money reports that the average couple retiring at 65 spends $285,000 in healthcare costs. Beat the average with a lifetime of healthy living.

Failing to Develop A Plan

Your financial plan will change, but planning for the future with goals for the year, for five years and for 10 years is essential to getting where you want to be. Save part of every paycheck to reach your goals for the future so you don't look back and realize that you've been so busy spending, you've lost years of saving for what you really want in life.


About the Author

Linda Richard has been a legal writer and antiques appraiser for more than 25 years, and has been writing online for more than 12 years. Richard holds a bachelor's degree in English and business administration. She has operated a small business for more than 20 years. She and her husband enjoy remodeling old houses and are currently working on a 1970s home.

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