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5 Ways to Ruin Your Retirement

As much as we would like to blame the stock market for the shortcomings in our nest eggs, the truth is that our own choices also impact our retirement savings. And while no one sets out to ruin their retirement, statistics show that many of us are doing just that with our poor investing choices.

Are you choosing to wreck your retirement by making any of these choices?

You wait too long to start investing

When it comes to investing, you can’t make up for lost time. That’s why you should invest early, no matter how small the amount, to take advantage of compound interest. For example, a $2,000 lump sum invested when you’re 30 years old can grow to $72,000 by the time you’re 60. But that same $2,000 investment will be worth $237,000 if you invest it 10 years sooner. That’s the power of compound interest!

You don’t invest enough for retirement

The same survey showed that while saving for retirement is a main goal for most people, they want to split their disposable cash between paying off their home, saving for a child’s college fund, and retirement savings. Multitasking with your money is fine, as long as you first invest 15% of your income for retirement. Why? A paid-for home won’t help you cover your expenses in retirement. Neither will a paid-for college tuition. Focus on retirement investing first, then you can tackle your other financial goals.

You don’t invest for retirement at all

A recent survey by Deloitte Center for Financial Services found that nearly 60% of pre-retirees don’t have a retirement plan, and 20% expect to live on their Social Security benefits alone in retirement. The average monthly benefit from Social Security is only $1,230, so it’s clear that any savings are better than no savings. No matter how far behind you think you are, make a plan and start investing now for a better retirement.

You cash out or take a loan against your retirement savings

Roth IRAs and 401(k)s allow you to withdraw or borrow funds under certain circumstances. But doing so will not only lower your balance, you’ll miss out on that money’s growth potential. You could also be subject to taxes and penalties. Pay off your debt and build an emergency fund before you start investing, and use that cushion to pay for unexpected expenses. Keep your retirement fund for retirement only!

You invest on your own

Many investors believe they will save money by handling their retirement investing on their own. But do-it-yourself investors rarely have the time or the expertise to find the best funds or understand the market cycles that are part of stock market investing. As a result, they are more likely to reduce their returns by investing when prices are high and cashing out when prices fall.

Be confident about your retirement. Find an investing pro in your area today. 

Dave recommends you work with an experienced investing professional you can trust to help you choose funds and keep your plan on track. His investing Endorsed Local Providers agree with his investing philosophy and are ready to help you with your long-term retirement plan. Find your ELP today!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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