Avoid These 7 Retirement Mistakes (Or You’ll Regret Forever)

I’ve been helping people plan for their dream retirement for the last 16 years. I’ve nearly heard it all. I’ve had to tell people they can’t retire yet or that they have to save far more than they planned. The people who make these mistakes derail their retirement and jeopardize their success. I detail the top 7 mistakes I see that you’ll regret forever in this episode of the Retirement Made Easy Podcast! 

You will want to hear this episode if you are interested in…

  • [4:05] Mistake #1: Borrowing from a 401k
  • [8:06] Mistake #2: Planning to work indefinitely
  • [10:37] Mistake #3: Buying a timeshare
  • [12:02] Mistake #4: Delaying saving for retirement
  • [14:33] Mistake #5: Diverting the money to your kids
  • [19:28] Mistake #6: Avoiding investing in the stock market
  • [24:20] Mistake #7: People that relocate on a whim

Mistake: Borrowing from a 401k

You can borrow from 401Ks that have loan provisions. You can typically borrow up to 50% (or up to $50,000, whichever comes first). I can give you countless examples of people who’ve done this and veered off track. Why? They continue to borrow from their 401k. 

You’re borrowing from your future. If you get laid off or leave the company which you have the 401K loan from, you have to pay it all back within 90 days. If you don’t, you’ll also have to pay taxes on it. Doing this can quickly put you behind schedule for retirement.

Mistake: Planning to work indefinitely

Many people don’t have a strategy or game plan for retirement. They want to work until they “drop dead.” But even if you want to keep working, you have to think about possible scenarios. What if your health goes downhill and forces you to retire early? What shape would you be in financially? 

What if your company lets you go? What if they offer you early retirement? What if the company is bought out and your position no longer exists? There are too many things that can go wrong for you to not have a plan. 

Mistake: Delaying saving for retirement

Saving for retirement is something you have to do. Dave Ramsey recommends saving 15% of your household income. If you follow his simple advice, you’ll be set for retirement. Most people don’t do that. Some say they can’t afford it. But the truth is that you can’t afford not to. 

Many companies offer 401K matching. Microsoft offers a dollar-for-dollar match up to your annual contribution limit. The earlier you can get funds in a retirement plan, the longer they can grow, and the better off you’ll be. 

Mistake: Diverting the money to your kids

I’ve heard of people cashing out their 401Ks, Roth IRAs, brokerage accounts, etc. to pay for their children’s weddings, vehicles, homes, student loans, personal loans for a business startup, and much more. 

I get it—you want your kids to have a better life than you have. But there is a balance. You can’t put everything toward your kid’s future and neglect your own. Many people don’t have the money they need to retire because all of their resources were poured into their kids. It is a recipe for disaster. 

By the time I have a conversation with these people, I’m usually giving them some bad news: Their retirement goals were negatively impacted because of their decision(s) to help their kids financially. Many can’t afford to retire and will have to increase their savings exponentially. Some may have to save 40% to replace the funds they withdrew. 

Listen to the episode to hear the other mistakes that you’ll regret making!

 

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