I’m Behind on My Retirement Savings: 4 Things I Regret Doing With My Money When I Was Younger

An early 2024 CNBC poll found that 53% of Americans feel behind on retirement savings . The amount you’ll need for retirement will vary based on your spending and goals; however, many financial gurus suggest you have at least 1x of your annual salary saved by age 30. This factor increases to 3x by 40, 6x by 50 and 8x by 60.

Are you on track? If not, now is the time to revamp your savings, spending and retirement strategy.

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“I was making pretty good money right out of college, but while using my paycheck to go out and have fun, I should have been focusing on my future,” said Joe S., an accountant from Lincoln, Nebraska. “The decisions I made years ago are coming back to haunt me. While I still have 20 years until retirement, I’m already playing catch up.”

GOBankingRates sat down with Joe to discuss four things that caused him to get behind in his retirement savings .

Money mistakes the super wealthy never make - that you might be doing now.

Taking On Too Much Debt

“Once I started my career, I fell into the trap of taking on too much debt,” Joe said. “New car? Sure! Luxury vacation? Why not! Before I knew it, I had credit card debt, a car loan, student loans and more. Those decisions that sounded great at the moment started to add up and drain the money I was earning each month. I was lucky to break even.”

The best way to avoid this money mistake is to budget . Even if you don’t have to worry about making ends meet each month, a budget is a great tool to track where your money is going and optimize your retirement savings. Countless budget apps connect to your bank account and automatically categorize your transactions.

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Not Prioritizing Investing

“Compound interest is a powerful tool when it comes to retirement savings,” added Joe. “Unfortunately, I didn’t prioritize investing in my 20s. Instead, I drove a new car, never said no to a vacation, ‘treated’ myself to multiple restaurant meals a week and had a false sense I was on track to retirement.”

Investing $250 per month from age 25 to 65 at an annual interest rate of 10% — the historical return of the S&P 500 — would result in nearly $1.6 million. However, delaying investing $250 per month until age 35 would result in just $565,000. Compound interest is a powerful tool that many people miss out on.

“Not to sound like a broken record, but budgeting is the resource that can help you avoid this money mistake and properly save for retirement,” Joe said. “By following strategic spending goals, you can free up more money to put toward investments, allowing you to retire comfortably.”

Spending on Frivolous Things

“As I started earning more money, I gave into lifestyle creep,” Joe said.

If you aren’t familiar with this term, it’s the concept that as you make more money, your expenses start to increase simultaneously.

“Instead of putting money toward my retirement goals, I was filling short-term and unnecessary needs,” Joe explained. “Did I really need another golf club to add to my bag? How about going out to eat when I had plenty of food in my fridge?”

These small decisions added up and caused him to fall behind in his retirement savings. Now, his money needs to work double-time to catch up.

To avoid lifestyle creep, make a list of the most important things to you. This could be spending time with family, enjoying the outdoors or catching up over drinks with friends. Find what is valuable to you and align your budget and spending with those goals.

Missing Out on My Employer Match

If someone were to hand you $20, no strings attached, would you take it? Most people would gladly accept the money. After all, that $20 could get you half a tank of gas, a new shirt or even an appetizer at your favorite local restaurant. Employer matches on a 401(k) work the same way.

When Joe was younger, he passed up his employer match by not contributing to his 401(k) retirement account. He was throwing away free money.

“I wish I knew the power of contributing to my retirement account to leverage the free match,” he said. “To avoid this same problem, look at your retirement plan and figure out how your employer matches contributions. If they match contributions dollar-for-dollar up to a certain percentage, you need to contribute the entire amount to receive the match. Leveraging your employer match has the ability to double your retirement income.”

This article originally appeared on GOBankingRates.com : I’m Behind on My Retirement Savings: 4 Things I Regret Doing With My Money When I Was Younger