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Retirement Pitfalls to Avoid

Retirement PitfallsAre you prepared to navigate the maze of retirement pitfalls that you may encounter along your road to financial independence and early retirement?

I understand that everyone wants to retire by the age of 35. But realistically, for many (or most) people, that is not an option. If you start working at the age of 25 and work for ten years, and then expect to have saved enough to never work again for the next 65 years, you better be making lots of money and saving every penny. You also better have side income sources (rental properties, businesses, dividend stocks) or sell a company to have adequate cash flow to cover your needs for many years to come. I’m not saying it can’t be done, just know that it will require a focused effort to reach that level at such an early age.

For those that have the resources, creativity, and drive to make early retirement a reality, go for it. For the rest of the world, we may need to work a little (or quite a bit) longer to reach our goals. But that’s not all together bad. Just because you still need a job, doesn’t mean the job has to make you miserable. If you’re willing to look, there are options that provide flexibility, a sense of accomplishment, and generate a good income.

Either way, as you work toward your personal retirement goals – no matter what age, there are some retirement pitfalls that can slow you down and maybe even derail all those great plans.


Common Retirement Pitfalls

Here are some of the most common retirement pitfalls you may encounter:

  1. Kids.  I hate to say it this way, but one of the biggest pitfalls that can impact your ability to retire at 35 or even 45 is having children. I am not saying don’t have children. My kids are my life and I wouldn’t change that for anything. But children can be expensive. And the money you are putting towards your children is money that you will not have for retirement. I have been willing to push out my retirement goals for the sake of providing for my children. This is a personal choice, but one that should be considered.
  2. Adult Children.  In addition to the costs to raise children, you can also find yourself continuing to spend money on your kids long after they have grown. With the average college student graduating with over $35,000 in student loan debt and meager job prospects, it’s not uncommon for parents to find themselves providing for their children long after they thought they would.
  3. Aging Parents.  Along the same line, depending on your parents financial situation, you may find yourself funding a portion of their retirement. Significant medical expenses can be especially significant for some if your parents are under-insured. If your parents are going to require financial assistance, start discussing and begin preparing early for how you will handle this.
  4. Failing to Reconcile Differing Views From Your Significant Other.  It’s not necessary that both parties have the same view on spending, saving, investing, and retirement; but, it is necessary for those differing views to be reconciled. If one partner likes to spend, there needs to be a mechanism for controlling that spend. This really comes down to communication. And the more each party communicates with the other and shares their perspective, the better chance the pair have to find good solutions.
  5. Too Much House.  For most people, their house is the largest single expenditure they will make in their lifetime. But if you’re not careful, that expenditure and all the expenses that go along with it can keep you from meeting your retirement goals. The bigger and more expensive the house, the greater the expenses above and beyond the mortgage. Items such as taxes, insurance, utilities, and maintenance can all add up. But with a bigger house often comes the social pressure to spend more on other items like cars, club memberships, private schools, and trips. Don’t be house poor.
  6. Expensive Cars.  Other than their house, for many people, their car is the next largest expense item. For many, it has become almost expected that they will buy at least one car per driver. And many times, you’ll see families continuing to trade in their used car for a new one every three or four years, thereby always having a car payment. This in turn leads people to decide, why not lease since I already have a car payment? It’s a vicious cycle and spending that much money on a car that sits idle for 95% of the time will dramatically impact your progress to retirement. If you want a good rule of thumb, see the article written by Financial Samurai about not spending more than 10% of your gross income on a car. To clarify for those inclined to buy expensive cars, that’s the total value of the car not exceeding 10% of your gross income.
  7. Extravagant Travel.  There are ways to travel inexpensively and there are ways not to. If you are willing to put in the work and have some flexibility, you can sometimes get pretty good deals. It often depends on the time of year you travel and where you go. This is another area that can be significantly impacted with children. If you have no kids, you can travel when you want (within the confines of your job). But with children, you’ll usually have to travel when they are out of school which coincidentally coincides with the busy season for many popular vacation spots.
  8. Big-Ticket Items.  We have already covered some of the main big-ticket items above, but others can creep up and derail your retirement plans. Items such as large pieces of furniture, entertainment centers, even room additions and home renovations are all potentially expensive items. As you contemplate one of these items, think about how much it is really going to cost you. Not just now, but in the future. And ask yourself, how much value will I get from this purchase?
  9. Poor Spending Habits.  This is a general statement, but have you ever noticed that some people are just naturally frugal. They cut coupons and bargain shop for the best deals on everything. They truly do not like to spend money and will do whatever they can to minimize their spending. If you can develop this mentality, it will serve you well getting to retirement.
  10. Credit Card Debt.  I left this for last because if you don’t remember anything else from this article, remember this. Credit card debt is the greatest of all retirement pitfalls. While you are carrying credit card debt or any other high interest consumer loan debt, you will never reach retirement. If you have any credit card debt, stop spending, stop investing and pay it off as soon as you can. This is the best return you can get on your money without a doubt. Hopefully, that was clear enough.


As you look out for these retirement pitfalls, don’t just ask yourself how much they cost today, but how much they will cost you in the future. Based on your income level, you might be able to afford many of these items. But that may mean putting off retirement for years and years. Is it really worth spending $30,000 to put in a home theater when that same money invested at 6% over 20 years will grow to nearly $100,000!


What other retirement pitfalls do you run into? How do you resist the temptation to spend today?


Permanent link to this article: http://financialslacker.com/retirement-pitfalls-avoid/


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  1. Route To Retire

    Aging parents was one I didn’t think about until a handful of months ago. The relationship with my parents is a little rocky (that’s a whole ‘nuther story!), so this pitfall would kind of irk me in a way… and you’d probably understand if you heard the stories! 🙂

    Another pitfall might be not enough motivation. I know a lot of people that love the thought of retiring early, but then get frustrated at tightening up the budget and so give up and decide to go on a vacation instead.

    — Jim

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    1. Financial Slacker

      For most of us, there is a balance between living your life and only thinking about the future. It can be even more challenging to stop the spending if your income easily supports it. But I have realized that your ability to retire is much more dependent on your spending level than on your income and savings (within reason of course).

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  2. Thias @It Pays Dividends

    These areall very real pitfalls that could affect any of us. It just shows that maybe you want to a for a slightly higher FI number so you can protect in case any of these happen in your life.

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    1. Financial Slacker

      That is the big concern.

      I am coming around to the idea that rather than set a target investment balance (25x or 30x savings), I would rather begin the process of converting the holdings into dividend stocks, bonds, and real estate to generate the needed cash flow. That way I know for sure how much income I have.

      Although some of the expense pitfalls can still impact you even after you retire (extraordinary medical expenses, etc.).

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  3. Dividendsdownunder

    The first 3 are almost unavoidable, except you can encourage your children and parents to have a good financial mindset and look after their finances.

    The rest are very good things to look at. Cars are the biggest waste of money in a budget, that’s for sure.


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    1. Financial Slacker

      It is unbelievable how much you can spend on a car. And when you divide the cost by the usage, it might be less expensive for a family to own one car and Uber everywhere else when you need to be in two places at the same time.

      With respect to kids, parents, and adult children, the expense is difficult to anticioate. One solution is to set up a separate emergency fund to cover unanticipated and unplanned costs.

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  4. DivHut

    A great list that can show how easily retirement goals can be thrown off course. Of course, many people these days are living in the sandwich generation taking care of children and parents. We are all living longer which not only puts a strain on your own retirement figures but we’re also stretch caring for elder parents living into their 90s and beyond.

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    1. Financial Slacker

      You’re right. When they initially set up social security, many retirees also had pensions that they could rely on for retirement. Plus, people retired at 65 and the life expectancy wasn’t much beyond that.

      With an extended life expectancy, people forced to fund their own retirement, and the sandwich issues you mentioned, it’s getting harder and harder to see how the numbers add up for retirees.

      I think we might be in for some serious social challenges over the next 20 years.

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  5. FinanceSuperhero

    Houses and cars are the silent killers of all money dreams. I don’t see that changing, as long as the average person finds happiness in things rather than relationships and experiences.

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    1. Financial Slacker

      I’ll bet home expenses and car expenses consume 50% of the average household’s expense budget. Maybe even more for lower income earners.

      Will the shared car economy change that? No more need to own a car. Just call one on your phone when you need it.

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  6. Mr. PIE

    Regarding housing, we are going to forego a sizable landscaping project. No way will we recoup costs. Kerb appeal is actually pretty good anyway and we’d just be finessing.
    Best to put towards our next phase in FIRE and reap the rewards there.

    View Comment
    1. Financial Slacker

      If the project doesn’t add to the value of your home, I agree that you’re better off putting the money somewhere else.

      The only concern I have is where to put it. I am not optimistic on the stock market these days.

      I’m currently looking at a few different real estate deals that show promise.

      Any thoughts on where else you can find above-market returns?

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  7. Financial Samurai

    I’m waiting for my kiddies, but they are late lol. I see my mortgages as kids. Gotta always feed them! Let’s see what the future holds. In the meantime, I plan to stay as healthy as possible!


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    1. Financial Slacker

      There are benefits to having kids a little later in life. It gives you the chance to save up before you start spending on the kids. So even if you can’t put as much away while they’re living at home, you reap the compounding benefits of starting early.

      You may also be in a better position in your career if you wait longer. Both Ms. Financial Slacker and I have been able to primarily work from home since our kids were born. It’s been great to be a part of everything and not get frustrated when you’re missing out while sitting in traffic during a two hour commute.

      Thanks for the comment.

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  8. Pamela

    Extravagant travel, that is something we are trying too watch out for when booking our trip to Hawaii. We really want the break and plan to cash-flow the entire vacation but sometimes I feel like these monies could be put towards growing our retirement and long term savings. Its a toss up but I think we can reach a middle ground and travel there without using too much funds.
    Adult children is a huge one as well. Not living with my parents has taught me to grow up very quickly and I am thankful for that.

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    1. Financial Slacker

      It is all a balancing act. You need to save for the future, but you also need to live in the present and enjoy yourself. Exploring Hawaii is an incredible experience and if you can get there, I highly recommend it.

      What island are you planning to visit?

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      1. Pamela

        Honolulu. Yah I am excited

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