The 7 Retirement Planning Mistakes You Can’t Afford to Make

7/26/2022|Updated: 7/26/2022

Unless you’re a financial advisor, the idea of planning for retirement probably doesn’t get you excited. However, if you want to enjoy a comfortable life down the road, you have to be intentional about this aspect of personal finance. It doesn’t seem urgent when you’re 25, 35, or even 40, but it’ll be critically important when it comes time to actually retire. And considering that retirement planning takes decades, it’ll be too little too late. Today we’re going to walk you through a few retirement planning mistakes you can’t afford to make.

The Sad State of Retirement Planning

You won’t see a feature story on the evening news. You won’t even hear about it in most finance classes these days. Unfortunately, the sad state of retirement planning in the U.S. gets very little meaningful coverage. For everyone’s benefit, let’s review some facts:

The average American retires at age 63 and enjoys an 18-year retirement. However, many retirements last much longer–closer to 30 years, in fact. Thus, you should be planning on a 30-year retirement if you want to be on the safe side.
If you expect to draw $5,000 per month for 30 years, you’ll need roughly $1,060,751 in savings (accounting for investment returns and inflation).
The average 50-year-old American has just $42,797 saved for retirement, while 40 percent of all Baby Boomers have nothing saved.
4 out of 5 Americans between the ages of 30 and 54 believe they won’t have enough saved for retirement when the time comes.
36 percent of Americans over the age 65 are totally dependent on Social Security, which is supposed to be a source of supplemental income.

Most people are taught that it’s good to spend, spend, spend, and accumulate debt. Saving is for nerds, they say. And while spending might be more fun–and certainly provides a rush of excitement–this sort of satisfaction is fleeting. Saving might not provide any immediate joy, but there’s long-term satisfaction attached to financial stability.

7 Retirement Planning Mistakes You Can’t Afford to Make

As the data shows, some people ignore retirement altogether. Other people think they’re planning for retirement, when they’re really just weaving a tangled financial web that will eventually come back to haunt them.

As you look towards retirement, here are some mistakes you don’t want to make.

Not Saving Anything At All

The biggest retirement planning mistake is doing nothing at all. There are far too many people who don’t think about retirement planning until it’s too late. Or if they do think about retirement planning, they’re banking on Social Security, winning the lottery, or collecting on a relative’s estate. Sadly, none of these things are guarantees. Social security may run out, winning the lottery is highly improbable, and your parents may blow through all of their money before passing.