5 Ways to Ruin Your Retirement

The following is a post from staff writer Crystal at Budgeting in the Fun Stuff, where she writes about finding the balance between paying your bills, saving for your future, and budgeting for the fun stuff along the way.

When I saw this article, 5 Easy Ways to Ruin Your Retirement, I knew what I had to write about this week. I immediately wanted to know what we should concentrate on.

Here are the 5 ways the article mentioned that you can ruin your retirement and my personal thoughts on them:

1. Not Running the Numbers

They say that anyone over 40 should have a rough idea of what they will need in retirement, but why not run the numbers even earlier? My husband and I know that we’ll need at least today’s equivalent of $2 million by the time we want to retire in 25 years. Knowing that number motivates us to save as we should. Do you know how much you will need? Think about how much you spend now and what sources of income you will have when you retire.

2. Having Only One Plan

Even though my husband and I have a definite plan to retire by age 52, we also have a few backup plans as well. If we decide to have kids, we will probably push back retirement for at least 5 years. If our retirement accounts don’t return at least 6% for the next 25 years, we’ll also push back our target date. If we simply can’t work at some point, we’ll cut back on our expenses so we can live on less. What kind of plans do you have?

3. Passing Up Opportunities to Save

If you can save early, do save early. If that opportunity has already passed, remember to take advantage of every opportunity that pops up. Remember the contribution limits for your 401(k) and Roth IRA. Also diversify your investments so all of your retirement eggs aren’t in one basket.

4. Depending on Your Home Equity

Repeat after me, your home is not a retirement account. Unless your plan includes selling your house or taking out a reverse mortgage, home equity doesn’t matter for retirement purposes. You’ll need somewhere to live and your home equity will not help you in that respect usually.

5. Ignoring the Nonfinancial Stuff

I love this one the most. Too many people get so tied up in career advancement or money-making ventures that they forget to have other lives too. If they truly enjoy work, then retirement is probably the furthest thing from their minds. If their long-term goal is to retire comfortably, then they should remember to develop a non-work life now too. I enjoy my hobbies and friends so much that I cannot wait until I retire so I can develop my non-work life even more!

Can you think of any other things we should keep in mind to ensure a happy and solid retirement?