Avoid These 4 Mistakes That Often Derail Retirement Plans
You're chugging along with your savings goals, but are you really doing everything right? See if you're at risk for getting off track due to four all-too-common mistakes.

It’s not always a lack of savings that keeps us from enjoying retirement. No matter how much money is in the bank, there are common mistakes savers make that knock their retirement plans off track. Avoid these four mistakes so you don’t sabotage your golden years.
Getting Hit by Early Withdrawal Penalties
There are a lot of rules and penalties involved when withdrawing money from your retirement account before a certain age. It’s important retirement savers understand those rules if they want to keep their retirement plan on track. If you decide to tap into your IRA or 401(k) before age 59½, you will face an early withdrawal penalty. Generally, you will have to include that money in your gross income for the year and will have to pay an additional 10% tax penalty. There are some exceptions to early withdrawal penalties. (For more on that, read How to Avoid the Penalty for Early Withdrawals from Your IRA.) Talk with your financial adviser before deciding to withdraw money from your retirement account.
Missing Out on the Employer Match
A recent survey shows that about one-third of workers are not contributing enough to their 401(k) or employer-sponsored retirement plan to get the full match from their company. The value of a missed match is calculated to be about $750 each year. Although that doesn’t sound like a lot, it can add up to almost $100,000 in missed retirement savings over the course of your career. Double-check with your human resources department to make sure you are getting your full match. And if you aren’t, set a goal to gradually bump up your 401(k) contributions to meet the match threshold. Retirement savers need to take advantage of this free money from their employer.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Living with High Investment Fees
It is important to know how much you are paying for your investments. Investment costs that sound small, like 2%, can eat away at your savings over time. Those fees compound along with your returns. That means you aren’t just losing money in the fees you pay, you are also losing the growth that money could have had. Take this example: If you have $100,000 invested in a retirement account with no costs or fees, and the account has a 6% return each year for 25 years, you will end up with about $430,000. Now imagine that same $100,000 account with a 2% fee each year for 25 years; that will leave you with only $260,000. That small fee wipes out about 40% of your account value. This is why long-term retirement savers need to be aware of their investment fees and costs.
Ignoring Compound Interest
Compounding is one of the best arguments for saving early. On a very basic level, compound interest is earning or charging interest on top of interest. When retirement savers ignore the value of compound interest, they are missing out on growing their money more quickly. If you start saving $5,000 each year at age 25, you could have $1.3 million in the bank by age 65, assuming an 8% return. However, if you waited until you were 35 to start saving $5,000 with an 8% return, your retirement savings would be cut in half. Time is key when letting compound interest work in your favor, and that’s why we need to think long-term when saving for retirement.
How Do We Stay on Track?
Many people believe they can plan for retirement alone, and that might work when you are in your 20s. However, the closer you get to retirement, the more crucial it is that you have a solid plan in place that will keep you on track. The problem is, only one in five people have a written plan for retirement. Your retirement security goes beyond how much you have tucked away in your savings. It relies on a comprehensive plan that will help get you to and through your golden years. Your comprehensive plan should include strategies to pay for health care and a plan for claiming Social Security; it should also include strategies to be tax efficient in retirement and leave a legacy for family and loved ones. Sit down with a financial adviser and talk about your goals. Your adviser will create a plan to help you meet your retirement goals.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Tony Drake is a CERTIFIED FINANCIAL PLANNER™ and the founder and CEO of Drake & Associates in Waukesha, Wis. Tony is an Investment Adviser Representative and has helped clients prepare for retirement for more than a decade. He hosts The Retirement Ready Radio Show on WTMJ Radio each week and is featured regularly on TV stations in Milwaukee. Tony is passionate about building strong relationships with his clients so he can help them build a strong plan for their retirement.
-
Could This Little Known Data Shift Hurt Your 2026 Social Security COLA?
The BLS has changed how it measures the inflationary data that determines whether Social Security benefits will get a Cost-of-Living Adjustment (COLA). Will it hurt your benefits?
-
Financial Pros Provide a Beginner's Guide to Building Wealth in 10 Years
Building wealth over 10 years requires understanding your current financial situation, budgeting effectively, eliminating high-interest debt and increasing both your income and financial literacy.
-
Financial Pros Provide a Beginner's Guide to Building Wealth in 10 Years
Building wealth over 10 years requires understanding your current financial situation, budgeting effectively, eliminating high-interest debt and increasing both your income and financial literacy.
-
Five Mistakes to Avoid in Your First Year of Retirement
Retirement brings the freedom to choose how to spend your money and time. But choices made in the initial rush of excitement could create problems in future.
-
I'm an Investing Expert: This Is How You Can Invest Like Warren Buffett
Buffett just invested $15 billion in oil and gas, and you can leverage the same strategy in your IRA to potentially generate 8% to 12% quarterly cash flow while taking advantage of tax benefits that are unavailable in any other investment class.
-
Integrity, Generosity and Wealth: A Faith-Based Approach to Business
Entrepreneurs who align their business and financial decisions with the biblical principles of integrity, generosity and helping others can realize impactful and fulfilling success.
-
How Much Income Can You Get From an Annuity? An Annuities Expert Gets Specific
Here's a detailed look at income annuities and the factors that determine your payout now and in the future.
-
Your Paycheck Stops in Retirement, But Your Life Doesn't: An Expert Guide to Planning for a Confident Future
Social Security will replace only about 40% of your salary, on average. A solid financial plan will help you plug the gap so you can rest easy in retirement.
-
Are You Jeopardizing Your Future to Help Your Adult Kids? An Expert Guide for How to Not Do That
If your adult child needs financial help, of course you want to provide it, but crafting a plan that also protects your financial and emotional well-being is vital.
-
I'm a Financial Planner: Here Are Some Long-Term Care Insurance Tips for Every Age
Strategies include adding riders to life insurance for younger individuals and considering hybrid or traditional long-term care policies for those in their mid-50s and 60s.