
How’s that retirement fund going?
If you’re like a lot of people, you may have doubts about whether you’ll have enough money tucked away to avoid spending your final years living on ramen noodles.
Just 18% of workers say they are “very confident” they will have enough money for a comfortable retirement, according to the 2023 Retirement Confidence Survey prepared by the Employee Benefit Research Institute.
Individual workers’ reasons for not being more confident about their retirement savings vary. But if you make these mistakes, you’re virtually guaranteed to retire poor.
1. Keeping up with the Joneses

You can’t spend your whole life pretending to be rich and then think you’ll retire rich too.
Living within your means isn’t always glamorous, but it is smart. And being smart is what will make you a wealthy retiree.
Rather than upgrading your smartphone every two years and your car every three, try being content with what you have. It doesn’t matter if all your friends are remodeling their kitchens. If yours works perfectly fine, leave it be.
Having a realistic budget is the first step toward living within your means. For specifics, check out “8 Secrets to Building a Budget That Works.”
2. Not saving enough money

When you’re not spending money to constantly upgrade your toys, you’ll have more money to save.
With traditional pensions all but extinct, it’s up to you — and you alone — to save up the cash needed to live comfortably in retirement. Don’t count on Social Security to do that either. The average monthly Social Security retirement benefit was just $1,837 as of June 2023. That adds up to a scant $22,044 for the year.
Failure to save enough money is a sure way to retire poor. Ideally, 10% to 15% of your income should be going into a retirement account each month. If you are behind in funding your savings goals, you probably should save even more.
3. Making the wrong savings priorities

On the other hand, you can save money but have your priorities all wrong.
Yes, college for the kids is important but not at the expense of your retirement account. The kids can always get scholarships, jobs or even loans if absolutely necessary.
Make your retirement savings a top priority. Again, set aside 10% to 15% of your income in retirement accounts. That may seem like a lot of money to save each month, but that’s why you aren’t keeping up with the Joneses, right?
4. Saving money in the wrong accounts

Another common mistake is putting retirement money in the wrong accounts. A typical savings account isn’t going to cut it.
Instead, put that money in tax-advantaged retirement accounts such as 401(k) plans or individual retirement accounts (IRAs). These accounts come with tax benefits as well as stiff penalties for early withdrawals. That may seem harsh, but the government has your best interest at heart (really!). Assessing penalties for early withdrawals is intended to prevent you from dipping into that cash during your working years and ensures your savings are still there at retirement time.
And by all means, if your employer offers a 401(k) match, put your retirement savings there first. You’d be a fool to pass up that free money.
5. Financing everything

Today, retailers make it easy to buy everything — from furniture to a car — on a payment plan. However, you’ll never have money to save for retirement if you finance every purchase.
Rather than spend money on interest, flex your self-discipline muscles and wait until you have enough money saved up before buying things. If you keep yourself out of debt, you’ll be amazed at how far you can stretch paychecks. Then, you can live comfortably now and bank enough to live on comfortably in the future.
6. Letting your credit score go

If you do need to finance something — houses and cars are the usual suspects — you’ll want to have excellent credit in order to get the best interest rates and terms.
Otherwise, you’ll end up paying sky-high interest, sending precious money to your creditors that could be used to bolster your retirement account instead.
If your score could use some TLC, check out “7 Ways to Boost Your Credit Score Fast.”
7. Being a chicken when it comes to investments

Finally, “no guts, no glory” can apply to your investments.
Sure, you don’t want to be dumb about your money. Placing 100% of it in volatile stocks a few years before retirement is a good way to land in the poorhouse. But at the same time, be aggressive enough with allocations to ensure your returns at least outpace inflation.
If you need a quick crash course on terms like “diversification” and “asset allocation,” start with “14 Money Terms to Learn So You Don’t Die Broke.”
If you’re feeling a bit lost about exactly how to diversify your investments or pick a fund, check out “Build a Successful Retirement Plan With These 5 Steps.”