7 mistakes you could be making with your retirement savings


  • Saving for retirement is an important financial goal for most people, so you’ll want to avoid mistakes.
  • Failing to rebalance your portfolio, investing irrationally, and ignoring 401(k) matches can hurt you.
  • Other mistakes include not saving enough, accounting for all your retirement expenses, etc.
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Retirement is one of your biggest financial goals — and while many of us have years (or decades) ahead of them, small decisions you make now can have a major impact on your golden years.

According to the Federal Reserve, 44% of non-retired adults believe they are not on track to retire. One in four non-retired adults say they have no retirement savings.

Some common mistakes savers make can quickly derail their savings and make it difficult to get back on track. Avoiding these mistakes early on can save you money in the long run.

1. You don’t rebalance your portfolio over time

Rebalancing your portfolio can help ensure that it’s diversified and on track to meet your goals. It also helps smooth out market fluctuations. Most savers will shift their investments towards more conservative options as they approach retirement age.

You should rebalance periodically – about once a year – and only make modest adjustments to your plan. If you have multiple retirement accounts, it’s important to consider the allocation of your entire portfolio, not just each individual account.

Want a more hands-on approach? Many 401(k)s offer you the option of investing in a target date fund, which helps you automate investing with a fund that adjusts as you approach retirement age.

2. You choose your own investment strategy

Some savers manage their retirement investment strategy themselves, putting their nest egg in a taxable brokerage account, which can mean lower fees, a wider selection of investments and potentially higher returns.

But actively managing your retirement funds is riskier and more time-consuming. We often invest irrationally, and the last thing you want is for your behavioral biases to get in the way of your retirement. Not to mention, you won’t get the tax deferral and employer matching benefits that 401(k)s have if you go it alone.

3. You ignore the company match

If your employer offers a 401(k) match, take advantage of it! Subscribe and be sure to contribute at least up to the match amount — after all, it’s free money.

For example, if your employer has a 5% match, make sure you contribute at least 5% of your income, as long as you fall below the total contribution limits.

4. You change jobs too often

I’m not a career coach, so I can’t tell you if staying in a certain position is good for your career. But I can say that changing jobs many times over the years can mean leaving potential retirement savings behind.

Many employers offer contributions to your 401(k) plan, profit-sharing plan, or stock options. However, there’s a catch – most have to be “acquired” over a number of years before you get full ownership of the silver. Most vesting schedules range from three to five years.

Before you put in your two weeks notice, be sure to check what your vesting schedule is. If you’re nearing the deadline, you might want to consider whether changing jobs is worth leaving that money behind.

If you change jobs, don’t forget to transfer your old savings plan to the new one. Moving your old 401(k) to another plan could save you money in the long run with lower fees. You will also sometimes have a greater selection of investments in your new plan.

5. You forget tax diversification

Taxes affect the amount of money you can keep in retirement, and tax diversification is one strategy to help your money last in retirement. Your retirement accounts contain tax-deferred, taxable and non-taxable funds. Creating a strategy that takes into account the various tax treatments of your accounts can help you save money and give you more flexibility in how you access your savings.

A good example is combining your pre-tax 401(k) savings, which are taxed when you withdraw them, with Roth contributions, which are not taxed in retirement.

6. You don’t consider all your retirement expenses

We would all like to stay healthy for the rest of our lives. But the reality is that you may face health care expenses or even need long-term care, costs that are vastly underestimated. Some models estimate that a couple retiring at age 65 will need $197,000 to $285,000 for health care costs alone.

Although it can be difficult to predict what your medical needs will be throughout retirement, estimating your costs and developing a plan can help you avoid negative financial outcomes. I also recommend looking for long term care insurance to help cover future costs.

7. You’re not saving enough

The biggest mistake I see others making when saving for retirement? That they don’t save enough — or not at all!

Saving for retirement is something that takes years, and starting as early as possible gives you more time to put money aside, make a plan and take advantage of compound interest. The longer you wait to save, the more daunting and stressful it can seem.

Keep in mind these are mistakes many people make when saving for retirement – I’ve fallen into the trap before myself! But having a clear plan and sticking to it will help you stay committed to your goal and ensure that your golden years are truly golden.

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