Most people spend more time planning their annual vacation than they do planning for the 30 years of unemployment we call retirement.
The results are predictable. We rely on gut feelings instead of math. We let inertia make our decisions for us. We fall for comfortable lies instead of facing uncomfortable truths.
The path to a secure retirement isn’t complicated, but it is filled with potholes. If you trip on them early, the compounding effect works against you, turning small errors into massive shortfalls later in life.
These are the five dumbest mistakes experts see people making with their retirement savings.
1. Turning down free money
This is the single most damaging mistake you can make, yet millions do it every year.
If your employer offers a 401(k) match, that’s not a “benefit.” That’s part of your salary. If they match 50% of your contributions up to 6% of your salary, and you don’t contribute that 6%, you are voluntarily walking away from a free, guaranteed 50% return on your money.
There’s no investment on earth that guarantees you a 50% return on day one, risk-free.
Let’s say you earn $60,000 a year. A 3% match is $1,800 of free money every single year. Over a 30-year career, assuming a modest 7% return, that free money alone would grow to roughly $170,000.
2. Betting that taxes will be lower in the future
Traditional 401(k)s and individual retirement accounts (IRAs) feel good today because you get a tax break right now. You put the money in pre-tax, and it grows tax-deferred.
But there’s a catch: You have to pay taxes when you pull the money out in retirement. You’re betting that your tax bracket will be lower then than it is now.
Given the national debt and historic tax rates, that’s a risky bet.
For 2026, the Roth IRA contribution limit is $7,500 for individuals under age 50 and $8,600 for those 50 or older. You pay taxes on that money today, but it grows tax-free forever, and withdrawals in retirement are 100% tax-free.
Having a mix of taxable and tax-free income in retirement gives you control over your tax bill.
3. Being too scared to make money
When the stock market gets choppy, the instinct is to flee to safety — cash, savings accounts or CDs.
While having an emergency fund is vital, hoarding your long-term savings in cash is a slow financial suicide. The culprit is inflation.
Even with inflation cooling back down to around 2% to 3%, the purchasing power of a dollar is constantly eroding. As we remind our readers who are freaking out about the stock market, you have to take some risk to get a return.
If your “safe” money is earning 1% in a savings account while inflation is 3%, you’re losing 2% of your wealth every single year.
To build a nest egg that can support you for decades, you must invest in assets that have historically outpaced inflation, like stocks and real estate. Being too conservative is one of the riskiest things you can do.
4. Cashing out when changing jobs
The average person changes jobs every four to five years. When you leave, you get a letter asking what you want to do with your old 401(k).
Far too many people see a balance of $15,000 or $20,000 and think, “I could use that for a down payment/car/vacation.” They cash it out.
This is a mistake. First, the IRS hits you with a 10% early withdrawal penalty if you’re under age 59.5. Then, every dime is taxed as ordinary income at your highest current tax bracket.
Depending on where you live, you could lose 30% to 40% of your money instantly to taxes and penalties.
Worse, you rob that money of its future growth potential. Roll it over directly into an IRA or your new employer’s plan. Do not touch it.
5. Ignoring health care costs
Many people assume Medicare will take care of all their health care costs in retirement. It won’t.
Medicare is not free. There are premiums (for Part B and Part D), deductibles and copays. Plus, traditional Medicare does not cover routine dental, vision or hearing care.
According to recent estimates from Fidelity, a 65-year-old who retired in 2025 could spend $172,500 on health care in retirement — and that does not include long-term care like a nursing home.
If your retirement number doesn’t account for this massive expense, your plan is based on a fantasy. Consider opening a health savings account if you’re eligible, which offers a triple tax advantage to save specifically for these future medical costs.