Saving for retirement is one of the most important financial goals you’ll face in your lifetime. Yet, many Americans fall into common traps that can delay or even derail their retirement plans. Whether you're just getting started or already well into your career, avoiding these missteps can make the difference between a secure retirement and one filled with stress and uncertainty.
One of the biggest mistakes is waiting too long to begin saving. In your 20s and 30s, retirement can seem far off, making it easy to put off saving. But the earlier you start, the more time your money has to grow through compound interest.
Even small contributions early on can grow into substantial sums over time. Waiting until your 40s or 50s means you’ll need to save much more aggressively to catch up. Start as early as possible—even if it’s just a small amount.
Many people contribute to their 401(k) or IRA, but not at a level that will support a comfortable retirement. A general rule of thumb is to save at least 15% of your gross income each year, including any employer match.
If you’re only contributing a few percent, you may fall short of your retirement goals. Increase your contributions gradually each year, especially when you get a raise or reduce other expenses.
Employer-sponsored 401(k) plans often come with matching contributions, such as 50 cents for every dollar you contribute up to a certain percentage. Not contributing enough to receive the full match is like turning down free money.
Make it a priority to contribute at least enough to take full advantage of your employer’s match. It’s one of the fastest ways to boost your retirement savings with zero risk.
When people change jobs, they sometimes cash out their 401(k) instead of rolling it over. This is a costly mistake. Not only do you pay income taxes on the withdrawal, but you also face a 10% early withdrawal penalty if you're under age 59½.
More importantly, you lose the potential for those funds to grow over time. Instead, roll the money into a new 401(k) or an IRA to keep your retirement savings intact and growing.
Many Americans assume Social Security will cover most of their retirement expenses. In reality, it’s only designed to replace about 40% of your pre-retirement income. The average monthly benefit in 2025 is about $1,900—not enough for most people to live on comfortably.
That’s why it’s crucial to build up personal savings through 401(k)s, IRAs, and other investment accounts to bridge the gap and maintain your lifestyle in retirement.
As you get closer to retirement, your investment strategy should evolve. Many people either remain too aggressive—risking large losses late in the game—or too conservative too early, missing out on growth opportunities.
A good approach is to shift gradually to more conservative investments as you approach retirement, balancing risk and security. Target-date funds can be a helpful tool, automatically adjusting your asset allocation over time.
Perhaps the most common mistake is not having a clear retirement plan. Without specific goals, it’s difficult to know how much to save or whether you’re on track. A written plan gives you a roadmap and helps you make informed decisions along the way.
Use online calculators, speak with a financial advisor, or take advantage of retirement planning tools offered by your employer or financial institution.
Planning for retirement takes time, effort, and discipline, but avoiding these common mistakes can put you on a much stronger path to a secure future. Whether you're just starting out or nearing retirement age, taking action today can help ensure that you enjoy the retirement you’ve worked so hard for. Don’t wait—start building your future now, one smart decision at a time.