According to Fidelity’s 2025 State of Retirement Planning Study, 38% of retirees wished they’d prioritized saving earlier.
I’ve seen a lot mistakes people make when it comes to their retirement (and have made some myself). Here are ten mistakes and how to avoid them.
Starting Too Late
Many of us put off saving when we’re young because we’re juggling student loans and credit card debt. When you’re just starting off in your career, retirement seems like a long time away. It’s easy to push it down the priority list.
But the earlier you start, the more time your money has to grow. Even small contributions made now can snowball into a comfortable nest egg later.
Expert tip: if your debt has an interest rate below 6%, consider investing some money while making minimum payments on that debt. The potential market returns over time might outweigh the interest costs.
Overlooking Employer Benefits
When you’re sizing up job offers, it’s tempting to focus on mainly the salary number. But one area to look for which can make huge difference in your retirement savings is employer benefits, including a 401(k) match.
If your employer offers a 5% match, and you earn $60,000 a year. That’s an extra $3,000 every year-no strings attached. This boosts your retirement fund without costing you a dime.
But don’t stop there. Take a close look at the vesting schedule. Understand how long you need to stay with the company before that match truly becomes yours. Also, check if they offer contributions to Health Savings Accounts (HSAs) or emergency savings programs. These perks can add layers of financial security and tax advantages that many overlook.
These “extras” could be the difference between a comfortable retirement and struggling to catch up later.
Not Contributing Enough
Are you leaving money on the table? If you’re not capturing your full employer match, you absolutely are. Aim to work up to contributing 15% of your pre-tax salary (including employer contributions).
If you can’t do 15% right now, start with what you can and increase it gradually.
Leaving Money in Cash
If you’ve set up automatic contributions to your 401(k), that’s a great first step. But have you actually invested that money?
Many people don’t realize their contributions just sit in cash until they select investments. That money can’t grow through compounding if it’s not invested.
Playing It Too Safe
Being too conservative with your investments in your 20s and 30s is like driving with the parking brake on.
When you’re in your 20s or 30s, you usually have the advantage of time on your side-meaning you can afford to take on a bit more risk with your investments because there’s plenty of time to bounce back from any market downturns. And taking calculated risks has led to better long-term returns.
Maxing Out Too Early
If you’re fortunate enough to max out your 401(k) early in the year, be careful.
Some employers only match contributions on a per-paycheck basis. If you hit your contribution limit in September, you might miss out on matches for the rest of the year unless your company offers a “true-up” contribution.
Ignoring Alternatives
No 401(k) plan at work? You still have options.
Solo 401(k)s, traditional IRAs, SEP IRAs, and Roth IRAs all offer tax advantages that could save you money in the long run. Just remember to track contribution limits across different plan types.
Limiting Yourself to Retirement Accounts
If you’re maxing out your retirement accounts, don’t stop there. A taxable brokerage account has no contribution limits and gives you more flexibility for accessing funds before retirement if needed.
Assuming You Can’t Contribute to a Roth
In 2025, you can make full Roth IRA contributions if you earn less than $150,000 as a single filer or $236,000 filing jointly. Even if you earn more, you might qualify for partial contributions.
And note that there are no income limits for traditional IRAs.
Taking Early Withdrawals
Emergencies happen. But try to avoid tapping your retirement funds early.
Early withdrawals typically face income tax plus a 10% penalty if you’re under 59½. And if you leave a job with an outstanding 401(k) loan, you might need to repay it immediately or face taxes and penalties.
Final Thoughts
As of 2023, Americans have left behind 29.2 million forgotten 401(k) accounts, holding a whopping $1.65 trillion in assets. That’s according to a recent report from Capitalize, a company dedicated to helping people keep their retirement savings on track even as they change jobs.
Avoid losing out on this money. You can always roll over your old employer’s retirement plan into a new eligible account. That way, your savings stay working hard for you, instead of sitting idle and forgotten.
Are you ready to retire with confidence?
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