7 Common Mistakes That Will Keep You From Retiring Wealthy

You have big plans for your golden years . Whether you’re hoping to retire in a few years or still have a few decades to go, you’re hoping to set yourself up for a life without money woes.

The average expected retirement age among non-retirees is 66 years old, according to Gallup. This number is important, because it will help you estimate how much money you’ll need.

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Proper planning and careful money management now are crucial to helping you achieve your goal of retiring rich. Here are some common mistakes you’ll want to avoid, as they can seriously deter your plans .

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1. Not Taking Advantage of Employer-Match Programs

If your employer gives you free money, snap up as much as you can. Specifically, if you’re offered an employer-match on your retirement fund, do everything you can to contribute to the highest matching rate.

Most employees aren’t doing this.

Of people who are contributing to an employer-sponsored retirement plan, just 24% are saving as much as their employer will match, according to a 2023 CNBC Your Money Survey.

Receiving a 3%-4% match on your retirement contributions might not seem like a big deal now, but it definitely is. This money will add up to help you fund a wealthy retirement, so make any sacrifices you can to take advantage of it.

See More: Retirement Savings: 4 Expenses Retirees Regret Keeping in Their Budgets, According to Experts

2. Not Creating a Holistic Financial Plan

Planning ahead is crucial to retiring wealthy. It’s just as important to consider the big picture. Too many people don’t take advantage of free financial tools that can help look at their finances as a whole to ensure their money is well managed and invested.

A financial services company called Empower has free tools that let you check your net worth, plan your savings and retirement and do a checkup on your investments. It also offers professional wealth management and various investment products.

Its portfolio analyzer lets you assess your overall risk, analyze past performances and model individualized asset allocations. There’s also a free investment-return calculator that estimates how much money you can earn over time, based on the amount of money you invest and the expected rate of return.

If you’re trying to develop a comprehensive long-term plan for your money, these tools can be monumentally helpful. You’ll learn how much money you really have, how much you should be saving, make sure you’re properly invested and gauge where you’re at in your retirement savings journey.

It takes just a few minutes to create a free dashboard and see how well you’re tracking toward your goals.

3. Supporting Adult Children

Loving your children unconditionally doesn’t mean you have to fund their lives into adulthood. If you’re doing this, you’re certainly not alone.

Nearly half — 45% — of parents of adult children provide financial support to them, according to Savings.com. Even worse, parents 10 years or less from retirement give the most to their children — approximately $2,100 per month — while only putting around $643 per month in their own retirement accounts.

It might not be easy, but it’s time to cut them off. You’ll actually be doing them a favor, because they need to know how to provide for themselves.

4. Succumbing to Lifestyle Creep

Getting a raise at work is exciting, because everyone wants to earn more money. It can be tempting to use the extra funds to buy a fancy car, nicer home or spend with less abandon — but don’t.

Start saving more aggressively, instead of creating a more expensive lifestyle to go with your higher paycheck. This probably won’t be as fun, but it will get you closer to your wealthy retirement goals.

5. Underestimating Retirement Expenses

Retirement might be more expensive than you think. In 2023, a single person aged 65 and up might need approximately $157,500 in after-tax savings to cover healthcare expenses in retirement, according to Fidelity. This number rises to $315,000 for the average retired couple.

Additionally, you’ll need to think about other basic expenses like housing, utilities, groceries, and how inflation might impact them by the time you’re retired. On top of that, you’ll also want to have money for things like entertainment, hobbies and travel, so it’s important to consider that, too.

As of October 2023, the average Social Security benefit is $1,709.70 per month. Every dollar helps, but clearly, this won’t be nearly enough to fund a cushy lifestyle in retirement.

6. Paying Off Debt Before Saving For Retirement

If you’re in debt, trying to pay it off as quickly as possible is a smart strategy. However, deferring saving for retirement until you’ve met this goal probably isn’t the best choice.

More than one-third — 41% — of people don’t contribute any money to their 401(k) or employer-sponsored retirement plan, according to a 2023 CNBC Your Money Survey. If this sounds familiar, it’s time to change your approach.

The sooner you start saving, the more compound interest you’ll earn. So, do keep working to pay off debt, but don’t completely abandon your retirement savings in the meantime.

7. Moving Your Money Out of the Market in a Downturn

It’s easy to panic when your retirement savings take a hit in a down market. Watching your hard-earned money seemingly vanish can cause you to make rash decisions that could seriously hinder your retirement goals.

Take comfort in knowing that markets have historically recovered. Before making any major moves, talk to a financial advisor. They can help you determine if you need to rebalance your portfolio, take your funds elsewhere or simply hang tight and wait for the upturn.

This article originally appeared on GOBankingRates.com : 7 Common Mistakes That Will Keep You From Retiring Wealthy