Dec 18

Bad Retirement Advice

retirementKeep reading for my WORST retirement advice. And I’m the perfect person to deliver this “advice” because I’m the prime example of what you shouldn’t do when it comes to retirement savings!

  • Wait to start saving for retirement until you’re 28. The 10 years between 18 and 28 don’t really matter, so focus on going to an expensive university, taking out student loans and “treating yourself a little”. You have the rest of your life to save for retirement and it’s not like you’ll save that much more towards your retirement in those 10 years. In fact, the little compound interest is barely worth bothering.
  • Wait until your company offers you money before you start saving. It’s not really worth it to put your own money into a retirement account unless you have a substantial amount of money to contribute. If your employer puts some money in a 401k or 403b for you, that should be good enough. The $50 a month you could put in your retirement fund wouldn’t move the needle much anyway.
  • Don’t bother with the company “match.” Similar to my advice above, but If your company is only matching 1 percent of what you contribute into your account it’s probably not worth your time to deal with the paperwork and hassle. So stick that money in a good old-fashioned savings account with a 0.0001% interest rate (OK it’s slightly better than that, but not much).
  • Don’t start saving for retirement until you’re making over $50k.Β When you start making a better salary you can start to think about retirement investing. For now just focus on your day-to-day bills because you’re “too broke” to start saving now. You can worry about catching up with your retirement later. You’re only 25, any none of your friends are saving for retirement either. Plus there’s always social security. We all know how well our politicians manage their money, why not let them manage yours!
  • Choose the investments in your retirement account without researching them. Just stick with the “average investors” plan that the company offers you. You’re not a financial expert so don’t bother trying to do any research or figure out what each of the options mean. Ignore the informational packet HR gives you about “high risk” and “low risk” investments. It doesn’t really matter and you’ll probably fair just as well guessing which percentage of your money to put where.

True Story! I’m ashamed to admit that these retirement “don’ts” are based on my own experiences. Because I was in a lot of student debt, I didn’t even think to start saving for retirement until all of the debt was paid. Even then, I didn’t have a lot of extra money and I didn’t think that $50 or $100 a month would really make much of a difference in the long-term (boy was I wrong!).

Truth be told, I didn’t even have a retirement account until 2 years ago. That’s when my company began putting money in a 403b for me. I work for a non-profit and after 2 years of service to the company, my employer starts to save a percentage of each employee’s annual salary for them in a retirement account. It’s not a lot of money, but it’s “free” money. “free money” that made me realize I needed to start saving on my own.

When I did start saving I chose my investments based on a little brochure that was included in my informational packet. I had no idea what I was choosing, or why, so I took the standard plan that they “make” for your and hoped that I’d made a good decision. Not exactly one of my wisest financial moves, but, thankfully it all worked out OK.

I’m certainly not a retirement expert now, but I am much better informed about retirement savings than I was 2 years ago. So if you’re just starting out with retirement savings, please learn something from my mistakes. And here’s some real (and good) advice that was given to me by someone who is far more wise and knowledgeable when it comes to retirement savings: Save Early and Save Often!

Are You Saving for Retirement? Have You Made any Mistakes Along the Way?

Image: TaxCredits.Net



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  1. Our mistakes are very similar, KK! Except that I’m 28 now and still have never had a full-time job and haven’t saved a cent for retirement. It’s so hard for me to put money in savings when we have so much debt and I don’t make much. I’m banking on death before retirement age, outliving my husband (life insurance), or my best friend’s baby growing up to be a professional football player. :/

      • KK on December 18, 2013 at 10:27 pm
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      Oh no! Unfortunately, I don’t think we’re that “unique” when it comes to the mistakes we’ve made. Many of my friends have made the same mistakes, which makes me believe they are pretty common. I’ll have to work on training my nephews to be good in some pro sport πŸ˜‰

    • Liz on December 18, 2013 at 9:57 am
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    It’s hard to find the savings while paying down student loans. I once heard that at a minimum we should be contributing 11-15% of your salary to retirement. I know a lot of my friends dont contribute anything at all.

      • KK on December 18, 2013 at 10:29 pm
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      It definitely is. I didn’t save for retirement at all when I was paying of student loan debt. I don’t regret the decision, because I was able to pay off the debt pretty fast and at the time my employer didn’t offer any incentives, but I probably should have been saving then anyway. I’ve seen statistics that most people aren’t saving for retirement at all, which either makes me feel a lot better about my late start, or a lot worse for everyone else.

  2. These are GREAT examples of what not to do. I’ve heard every single one of those excuses from friends/followers.

    Thank goodness you’re saving now. Makes a difference to start at 28 instead of 30 or 35 or heaven forbid – 40!

    Even if you’re just contributing 5% – it’s something. I understand the desire to pay off all debt first, but saving for retirement (and having an e-fund) is really important.

    Thanks for sharing, KK.

      • KK on December 18, 2013 at 10:31 pm
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      I’m pretty good at learning the “hard way” πŸ˜‰ I hope my mistakes “save” at least one person from making the same mistakes I made.

  3. You just summarized my entire life. I am currently 28, not saving for retirement because I am focusing on debt. When I get my new job I will contribute to retirement because it’s mandatory and I get a great company match. Oh to be 20 again and know what I should have been doing all along. πŸ™‚

      • KK on December 18, 2013 at 10:34 pm
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      Yours and mine, and we’re definitely not alone! I like to share all of the bad financial decisions I’ve made, in hopes that even one person will avoid doing what I did. I certainly could have done worse in a lot of ways (imagine how many people aren’t paying off debt or saving for retirement!). I think we’ve got that going for us at least.

  4. I hear ya KK! My story is fairly similar as well, I really didn’t start saving until a few years ago and then I took it all out for a downpayment on a house! So, time to start all over again! Luckily I now also have a company pension so I won’t have to save quite as much for retirement but I will have forfeited all those wonderful years of compounding magic πŸ™

    Great post!

      • KK on December 18, 2013 at 10:36 pm
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      If only somebody had done a little math for me and explained how much that early money adds up over the years. If I’d started when I was 18 and even put away $50 a month, I’d be way ahead of where I am today. Oh well, live and learn right? Lessons I’ll teach my kids some day.

    • anna on December 18, 2013 at 12:11 pm
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    “Wait to start saving for retirement until you’re 28” – check (unfortunately)! I didn’t really think it was important until around late 20’s, and it’s a big regret that I’ll definitely pass on to any “youngers” that my job hires. They might not listen (and some in their early 30’s still don’t), but hopefully it plants the seed. Great point about not really looking into what the accounts are invested in, too!

      • KK on December 18, 2013 at 10:38 pm
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      I practically beg the new hires to start retirement saving right away. At our company there’s no contribution until you’ve hit your 2 year anniversary. So many people don’t start until then and “waste” two full years of compound interest magic (I did).

    • E.M. on December 18, 2013 at 12:15 pm
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    My boyfriend likes to use the excuse that he’s not making much, and he would rather pay more toward his student loans. His company offers a 3% match and I told him it’s important to start now, so he conceded. I know it hurts to see less in your paycheck, but I told him saving for the future is worth it.

      • KK on December 18, 2013 at 10:39 pm
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      That’s totally a fight worth having (and he’ll definitely thank you when he’s getting ready to retire). You’d be foolish not to take that “free money” from his employer.

  5. Ah yes, good tips to not follow! I can say that I invested in my 401K when I first got my job. I didn’t put much in because I wanted to get out of debt. I think that was a terrible decision on my part. I am now putting in more money into my personal investing account to try and catch up.

      • KK on December 18, 2013 at 10:41 pm
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      That’s so great (and probably really unusual, I would imagine). Better to start with a little money, then not to start at all. I wish I’d contributed something earlier on my own.

  6. I’m glad that I started contributing to my retirement plan right after getting my first job. I probably should have contributed more though. So many people I know follow the above list thinking that they’ll make up contributions later when they earn more. Just curious, what is the default fund that “average investors” are put in. When I was with the federal government, they would just put you in the “G” fund which are government securities…very conservative. I know some companies put you in a target retirement fund based on your age. I guess everyone should do a little research but it’s not the worst thing in the world to be in a target retirement fund.

      • KK on December 18, 2013 at 10:45 pm
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      Good for you for at least recognizing the importance of starting early. I think most people in retrospect wish they saved more from the beginning, but live and learn. I don’t remember exactly what the “standard” plan put people into (it was a few years ago), but I know it was really conservative (far more so than I’d naturally be on my own). It might have been fine for someone who was close to retirement age, but for a 28 year-old, I should have been in something much more aggressive. Thankfully, bf caught that and suggested some alternatives.

  7. So all five bullets pertained to me until I met my husband… I’m now 27 and have started to save for retirement. That being said I also “treated myslef” a little too much by attending two private schools and taking out tons of student loans to make a social workers salary. I wish I knew more about what I was doing when I was at 18 though I’m happy doing the work I’m doing now and don’t know if I would have changed a thing…

      • KK on December 18, 2013 at 10:48 pm
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      I’m also a social worker, so I remember reading Mitch’s post about his “sw’er girlfriend” before you guys got married, and I could completely identify with it. You spend all that time and money and energy to go into a profession which is crapped on by a lot of society. Fortunately most of us don’t really care about that and just want to help people. It is a shame that the degrees we need cost so freaking much that we have to chose between student loan debt payoff and retirement.

  8. I don’t agree with the save up until the match advice. That’s usually 5-6%, people need to save between 10-15% to have a chance at a decent retirement.

      • KK on December 18, 2013 at 10:50 pm
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      The whole post was about what not to do, so don’t worry, I don’t really advocate for only saving what your employer will match. Like you said, 10-15% (or more if you can swing it) will give you a pretty decent retirement if you start saving young.

  9. I’m in a similar boat as you as I really didn’t start buckling down and saving until retirement until age 27. I did contribute a little money to my 401k and it was enough to get the match. However, I didn’t stay with the companies long enough to get vested so I never saw any of that money after I left. I don’t feel too bad for getting a late start though as their are many folks in their late 30s who are in a similar boat.

      • KK on December 18, 2013 at 10:53 pm
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      Bummer you didn’t get to keep that money. My company doesn’t start contributing until after 2 years of service, but the money is vested immediately. I think you’re definitely right about people in their late 30s (and much older folks) not saving for retirement. I still think many people believe social security will be enough to support them (eek!).

  10. LOL πŸ™‚ Yes I’ve made a lot of similar mistakes. The biggest two are starting late and when I became a freelancer I had no plan in places to save money. Now I’m playing catch up. πŸ™

      • KK on December 18, 2013 at 10:54 pm
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      If my employer hadn’t started saving for me I probably wouldn’t have given retirement much thought. I’m thankful they sort of peaked my interest and got my on the right financial track. Now I feel foolish I didn’t save earlier, but it is what it is. Can’t change the past. I’ll just have to play catch up a little bit too.

  11. I’m not saving much for my retirement now as I am in serious debt payoff mode but I am still putting some. I know the power of dollar cost averaging plus some is better than nothing! My work offers a 403 but no free money but they’re terrible at getting people to sign up so I don’t have one yet. I really need to work on that though as it’s an easy way to automate my retirement even more.

      • KK on December 18, 2013 at 10:56 pm
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      It’s hard to see that money coming out of your paycheck at first, but once it’s automated you sort of forget you used to get more money. What’s tough is when you’re paying off debt and want to save for retirement at the same time. I know some people advocate saving for the retirement even when you’re in debt, but for me I wanted the emotional and mental security of having my debt paid off first.

  12. This post really hit close to home for me KK. I’ve made too many financial boo-boos in my 20s but last year at age 29, i opened a retirement savings account and have been contributing a little bit every month despite aggressive debt repayment.

      • KK on December 18, 2013 at 10:58 pm
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      I could write a book about all the dumb financial mistakes I’ve made πŸ˜‰ Although I didn’t personally save for retirement when I was paying down debt, I think it’s probably a smart idea. Once that debt’s paid off, you’ll be glad to have the compound interest in the retirement account!

  13. I had a similar mentality when I graduated college that I didn’t think the little money I would put away would make a difference. But thank goodness, I didn’t listen to that and put it away anyway! Now I’m 28 and have a good chunk of change saved up.

  14. Sad but true, for most Americans. We’ve been there too, KK, but no more!!!

  15. I’m sure my biggest mistake is “not saving more,” since it seems like you can always be saving more than you are for retirement. That’s definitely some bad advice you listed! I have been contributing to my 401k from day one and it’s nice to see a small nest egg forming after three years now.

  16. Great list! We’ve done well in saving for retirement, mostly by starting early. We’ve never had the “we don’t make enough” attitude even though we earn very little. That’s why I love percentage-based budgeting so much. We don’t even max out our Roth IRAs but I’m glad we’re doing something!

  17. Perfect example of what not to do! I started saving for retirement at the age of 22 when I got my first “real job”. I contributed up to the match then and now that I’m self employed, I put $100 in a month to save SOMETHING while paying off debt. Can’t wait to knock out the debt and save way more!

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