Are Bad Habits Delaying Your Retirement?

Some hard-to-break habits can derail your retirement. Sometimes they are taught, and other times we don’t even realize that these habits are costing us to make mistakes bout saving for our retirement. I bet you recognize some of these bad 401(k) habits.

 I have plenty of time.

The fundamental rule in 401(k) education is to invest early and often. Taking advantage of your time before retiring is the key here.

By the time you retire, a little saving goes a long way, thanks to compound interest. The long time, however, can also give you a false sense of security. Because you believe that you have “Plenty of Time,” you decide to wait until later. A delay can result in a loss of potential income. 

Not taking advantage of a full match or justifying that a full match is saving enough.

It’s one thing to save, but quite another to save adequately. Failing to take advantage of your full company match is like leaving money on the table. The flipped side is stopping at the point where your employer taps out. 

Even though it is a good thing to maximize the employer’s contribution, it has very little relevance to achieving your retirement goals.

Saving for retirement isn’t about getting the full match from your 401(k); it’s about saving enough to retire comfortably.

I Saved Enough; I’m done.

You are falsely believe that an arbitrary number has some significance when you focus on it. Just because you have reached your retirement goal does not mean you should stop saving. The completion of your vesting period or your age can give you deceptive signals. You might think you’re all done once you reach a certain age, even though you’re still working.  

Constantly Checking Your Retirement Account.

The bad habit of chasing the ticker will persist even in participants aware of the power of compounding over time. If you are checking your 401(k) account value constantly? You might be chasing the ticker if that’s the case.

By paying too much attention to your retirement account’s fluctuations, you’re doing yourself a disservice.

Pulling your funds because of market crashes.

There will always be market crashes and economic downturns. Market calamity can appear out of nowhere, as the COVID-19 pandemic demonstrated. Investors should focus on how they handle situations like these. Please do not despair. Fear and anxiety should not drive you to sell rashly in a falling market. In times of low prices, stay invested and even acquire more shares. Investors who sell during market downturns to stem their losses and wait things out cannot capitalize on these opportunities. It is challenging to time the market. Invariably, market timing investors miss some of the market’s best days. If long-term investors remain invested despite market drops, their portfolio values are likely to be less negatively affected than those who sell during downturns and get back in later.

How many of these bad 401(k) habits do you recognize? You’re not alone if that’s the case. With this knowledge, you can avoid such detrimental dispositions in the future and start saving for your retirement.