4 Ways You May Be Sabotaging Your Retirement

Chances are you spend a lot of time worrying about retirement. According to a Gallup poll, 70% of people age 30–49 say having enough money for retirement is their number-one financial worry, ranking far above their ability to pay their credit card payments, mortgage and other bills.

Unfortunately, we’re often our own worst enemy when it comes to saving for retirement. We’re so busy trying to be responsible about our day-to-day financial issues that we end up ignoring our future needs.

Is it possible to get a handle on today’s obligations and plan for tomorrow too? It can be if you can avoid some of the most common ways we silently sabotage our chances for a secure retirement.

1. Living Without a Budget

We’ve all had those weeks when the money runs out and it’s still three days until payday. Whether that’s a lifestyle for you or it happens just a couple of times a year, it means you’re not taking control of your money—it (or the lack of it) has control of you.

Most people avoid budgeting because they believe it will restrict their ability to spend on what they want. The truth is a budget gives you permission to spend on the things you want without the nasty surprise of running out of money.

Once you’ve taken control of your money with a monthly budget, you can go from living from paycheck to paycheck to saving for emergencies and then saving and investing for the future. Saving becomes just another line item in your budget, but this one ends up adding to your bottom line instead of subtracting from it.

Related: The Simple Way to Make a Budget

2. Getting and Staying in Debt

Being in debt makes it nearly impossible for you to save money for retirement. After you make your credit card payment, your car payment and your student loan payment, there’s just enough left—you hope—to pay for necessities.

Stop that cycle by first deciding once and for all that you will live within your means and avoid debt at all costs. Next, pay off your debt using the debt snowball method:

·         List your debts (everything except your mortgage if you have one) from smallest to largest.

·         Make minimum payments on all your debts except the smallest.

·         Throw every extra dime you have at that debt until you’ve paid it off.

·         Now use that payment to attack your next smallest debt, and keep going until you’re debt-free!

No debt means no payments. You’ll finally have room in your budget to save money! First save up a full emergency fund of 3–6 months of expenses. Then you can get serious about saving for retirement.

3. Not Taking Advantage of Your 401(k)

Your 401(k) is the best way to kick-start your retirement savings. If your company offers a traditional 401(k), your contributions will lower your taxable income. So while you may contribute $100 to your 401(k), it will feel more like $75 when the money comes out of your paycheck. If you have a Roth 401(k) option, your contributions don’t affect your taxes now, but you will have the option for tax-free income when you retire. Be sure to review your options and choose the best one for you.

4. Hiding Your Head in the Sand

As much as we’d like to think differently, we won’t be strong and healthy forever. You may believe you’ll just keep working until you die, but as millions of people find out every year, that’s not always an option. They find themselves unemployed or they become too sick to work. At that point, it’s up to them to provide for themselves, and if they didn’t take the time to plan and save . . . well, things are going to be tough.

But your future doesn’t have to look that way. Start now by getting on a budget and paying off debt then focus on your future by investing in your 401(k). Then you can stop worrying about retirement and start looking forward to it!