Retirement might be a long time from now for you, but every little decision that you make now is affecting when you will retire, where you will retire, and how retirement will be for you.

Maybe you are young and you want to live it up and spend all of the extra cash you have on having fun instead. Just because you are young doesn’t mean that you don’t need to think about your retirement goals and start saving at least a little bit!

Retirement might be hard to think about if you’re in your 20s and don’t plan on retiring until you are in your 60s, but you should still be thinking about it. Even if you’re in your 50s and you don’t have hardly anything saved, you should of course still be thinking about your retirement and how you will spend it. Every decision that you make IS meaningful.

For us, we have some debt which includes my student loans and our mortgage. We are slightly delaying our retirement savings because we are so focused on paying off debt. Don’t get me wrong, we are putting plenty towards our retirement savings, but we want our debt gone now and are more focused on our debt payoff date.

1. Succumbing to lifestyle inflation

With each raise that you receive, are you spending it all or are you increasing your retirement contributions? You should be putting at least a little bit more of an increase towards your retirement goal. If you don’t spend the raise or even think about it being there, then you should have no problem increasing your retirement contributions!

Lifestyle inflation is something that we are currently guilty of. Our income has increased rapidly over the last couple of years. We used to only make enough to pay the bills (struggling college students living on their own!) and now our bills and debt payments equal less than 50% of what we make every month after taxes. This is a big change for us and something that we are currently working on.

2. Not taking part in your company’s retirement benefits

Does your company offer a match on retirement plans such as a 401K match? If your company offers a match, then why not take it? This is pretty much free money that you should have signed up for and be contributing towards.

We don’t have a 401K at my work, but I do have a really good SEP Plan. I don’t put anything towards it (I can’t, with a SEP Plan, only the employer can) and this GREATLY helps me with my retirement goal. My employer contributes anywhere from 5% (at the minimum) to 20% of my income plus all benefits (what they spend on my health insurance, etc) each quarter. This adds up quickly.

3. Withdrawing from your retirement fund

Do you routinely withdraw from your retirement fund to pay for things? Maybe it’s a vacation, to pay off debt quicker, etc. There are many negatives of withdrawing from any of your retirement funds. Yes, it is up to you personally in how you treat your retirement fund, but keep in mind that you will most likely be taxed heavily for withdrawing from your retirement fund early. These penalties can add up quickly and may not be worthwhile in the end.

I have been guilty of withdrawing in the past. I took some money out to pay off some of my student loans. I was penalized because I put it towards schooling (it is one of the exceptions so that you are not penalized). I do regret doing this though.

Have you delayed your retirement plans in any way?



Michelle Schroeder is the founder of Making Sense of Cents and Diversified Finances, a personal finance and lifestyle blog about budgeting, traveling, life, and student loans. Read further on her story and life.