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10 Signs You’re Not Saving Enough for Retirement

The average 65 year old has $149,000 saved up for retirementwhich is absolutely pitiful. Even if they receive $2,000 a month from Social Security (and I wouldn’t depend on that in the future), their monthly income with a 4% draw from their retirement account is still under $2,500 each month! At this point, I sure hope most of these 65 year-olds don’t have a house payment, otherwise they’re sunk. Based on this simple scenario of the average person, it’s important to recognize the signs you’re not saving enough for retirement.

not saving enough for retirement

10 Signs You’re Not Saving Enough For Retirement

You work hard. You earn lots of money. Wouldn’t you like to have some of it when you’re older? Heck, wouldn’t you like to have LOTS of it when you’re older? I think we all do. But, you have to be willing to sacrifice some things today if you want to be wealthy in the future.

Here are the 10 telltale signs you’re not saving enough for retirement:

not saving enough for retirement1) You Haven’t Started Yet

Duh…. This one is pretty obvious, but did you know that 26% of 50-64 year-olds still haven’t started saving for retirement??! If you’re 50 years old and you have absolutely no money stashed away in your retirement account, you’d better start contributing at least 25% of your income…TODAY!

If you earn $50,000 and you can somehow manage to save 25% of your income (or roughly $12,500), by the time you’re 65 years old, you’ll have $366,000 (assuming an 8% interest rate). It sounds like a lot, but if you need $4,000 a month to survive, it’ll only last you 9 or 10 years. Heck, you could live for another 20 years after your money runs out!

2) You Have Credit Card Debt

If you have credit card debt, you are not saving enough for retirement. Or, if you have been putting money into your savings, but you still have a credit card balance, then you officially can’t do math.

The average earnings of market investment is between 7-8%. The average credit card interest rate is 15%. This means that for every dollar you earn in your investments, you’re paying your credit card company two dollars. If you have credit card debt, then you simply shouldn’t be investing.

not saving enough for retirement3) You Get Nervous at the End of the Month

If the end of the month comes and you have to call your wife to see if you have enough money in the account to buy a $15 polo (yes, I actually witnessed this at TJ Maxx), then you’re officially not saving enough for retirement.

If you barely have enough income to pay all of your bills each month, then you’re probably living a little too high on the horse. Either your house is too big, your cars are too nice, or you’re eating out too often. Simple as that.

Related Article: 10 Extreme Tips to Cut Your Spending in Half

The better option? Spend a little less each month and put a portion of your extra funds toward an emergency savings account and another portion toward your retirement funds. It’s not exciting, but it will get rid of that permanent knot in your stomach.

4) You Buy Something Every Time You See a Comma

You know how I came up with this one? It used to be me. Every time I had a comma in my bank account, I started feeling wealthy and went out to buy something. A TV, a surround sound package, a gaming system: whatever I thought would be fun and that I had the cash for. Was I saving for retirement? Absolutely not! What a dope I was…

If you’re a natural spender, then you probably never see a comma in your bank account. If you are somewhat of a saver, but still have spending tendencies, watch out for this one. For whatever reason, it’s common for many of us to start spending money once we see a certain amount in our bank account (typically over a thousand bucks). If you want to retire with some money, force yourself to put that money into a retirement account and NOT in some stupid high-tech gadget!

5) You Have a Small Net Worth

Your Target Net Worth = (Age  x  Annual Pre-tax Income) / 10    — That’s the formula from The Millionaire Next Door on what your wealth should be.

If you’re 40 years old and earn $75,000 per year, then you net worth should be:

(40  x  $75,000) / 10 = $300,000

Put your numbers into the formula and to see if your net worth is on track. If you’re under 30 years old, then you might want to use Trent Hamm’s revised formula of:

Target Net Worth =  (Age  –  27)  x  Annual Pre-tax Income / 5

Notice that I’m not telling you to compare yourself against the average investor….because the average investor is broke! Hold yourself to the formula, not the average.

not saving enough for retirement6) You Can’t Wait for Tax Time

You know how I can tell that you’re not saving enough for retirement? You become giddy when it’s time to file your taxes.

You love the fact that you’re getting thousands of dollars in the mail to spend on whatever you want, but do you know how I see it? You gave the government hundreds of dollars more than you had to each month, and let them keep the money for a full year before returning it to you….without interest. You know, you could have earned about $75 more dollars by keeping the money and putting it into a high-yield checking account!

The average tax refund in 2015 was over $3,000. That’s absolutely ridiculous. Don’t ever do this again.

7) You Pay For Your Kids’ College

The average cost of college is now between $19,548 and $43,921 (public and private colleges, respectively) per year. Unless you earn $100,000+ per year and have virtually no expenses, then you can’t expect to pay for your kids’ college AND put money away for retirement.

Yes, college is expensive. And it’s true that most 18 year-olds have no money. But, if you want them to be responsible in college, then it’s best if they assume that they’ll be taking on the entire bill by themselves. They’ll work harder, they’ll spend less, and they’ll likely excel in life after college. And, best of all, they won’t be burdened by your bills when they’re older and find out that you never put money away for retirement.

not saving enough for retirement8) You’re Planning on Social Security

The Social Security trust fund will run out in 2037…possibly even before that if the government continues to borrow from the account. Contrary to popular belief though, this doesn’t meant that your Social Security checks will immediately be cut off and nobody gets a payout. Instead, we’ll all end up getting less of a payout – probably around 75% of what’s expected.

The Social Security trust fund is a surplus and not the entire invested amount. The majority of the checks that are cut to retirees are paid for by current employees in real time. In other words, if you’re 70 years old and receive a $2,000 check each month, about $1,500 of that check is being paid for by people working in the work force today, and $500 of it is being paid by the surplus. If the surplus runs out, then you’ll be left with 75% of your expected payout.

So what does this mean? It means that instead of getting a meager amount of money each month, you’ll be getting 75% of meager. If you’re still expecting Social Security to take care of all your needs, then I’m pretty certain you’re delusional and aren’t not saving enough for retirement.

9) You’re Not Earning Your Full 401k Match

Your company offers a match on your 401k contributions, buy you aren’t even contributing enough to get the full match! Why the heck not? It’s basically free money that you’re just leaving on the table!

Many financial advisors want you to put away 15% of your income toward your retirement. If you can’t even contribute 3%-6% to your 401k, then you’re definitely not saving enough for retirement!

not saving enough for retirement10) You Don’t Know Your Retirement Goal

According to Time Money, 53% of the American population said they “guessed” to figure out how much money they needed for retirement. If I would have guessed at my desired nest egg, I probably would have said that I needed $1 million…but I would have been dead wrong.

I want to retire with a consistent $50,000 coming in each year. BUT, if I retire 40 years from now, I’ll actually need $200,000 a year…thanks to inflation (which reduces our purchasing power by roughly 50% every 20 years). If I spent $200,000 each year, a measly $1 million sure wouldn’t last me very long would it?! Turns out that I need almost $3 million to retire the way I want to! Glad I didn’t just guess!

If you’re guessing at your retirement goal, then you’re almost certainly not saving enough for retirement.

What about you? Don’t tell me you’re not saving enough for retirement!

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My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. We still have a long road until we’re ready for retirement, even if we both work from home and it looks like retirement already. We’ll use the coming months to make more progress with our ‘golden years’ money.

    • I think most people are a long way from retirement, but a huge action today could make a gargantuan difference in the future! Be radical and save heaps of cash instead of pennies at a time. 🙂

  2. I know plenty of people in their mid to upper 50s who wish they had saved more than $100K so far and are nowhere near for a way to close their NEEDED retirement savings gap. I tell them its never too late to start and any improvement is their retired life improvement. Your post does list the very things everyone should do regardless of age. The sooner one starts the better. Great Post.

    • Yup, it’s always better to start late than do nothing at all!

  3. I love #4. I think my husband used to get the itch to buy something once he saw we had a certain amount of money sitting around. So I stopped letting him see our balances! He still rarely looks at them – too much temptation 🙂

    • Haha. I was the same way – spending because I had money… I have no idea what my wife’s threshold is…because she hardly ever spends a dime! Love it. 🙂

  4. These are all great signs that someone is not saving enough for retirement. I feel like a lot of people are so afraid of investing that it prevents them from saving. Saving is better than not saving!

    • I think you’re right, Michelle. There are so many people that are afraid to lose money in the stock market and just waste their money on cars and TVs instead. In the end, it makes absolutely no sense because they’re sure to lose money on those depreciating assets!!

  5. When figuring what you needed for retirement, don’t forget to allow enough for medical expenses which rise as we get older.

    • For sure! Great tip!

  6. Derek,
    Love the post, but I question the # from the “federal reserve” that says that most people in America have saved way too little for retirement. I know it’s only anecdotal, but the people I know (mid 50’s) have at least $250K and most have closer to $1M and a lot of them are completely debt-free, including their house and have paid for their kids’ college in full. Thoughts/comments? Thanks.

    • Sounds like you know the right people! The people I know have far less than that, and are closer to the numbers posted by the FR.

  7. Hi Derek,
    Do you think it is wise to use a financial analyst.Reading articles like this make me worry I do not have enough being saved or allocated correctly.

    • Hi Nicole. I’d say that 95% of the population should have a financial advisor. Interview for a good one (don’t just accept the first one you find). Make sure their views align with yours and that they’ll work to invest how you want to. Would you like me to answer this question in my new video response series on Sunday?

      • I was surprised after reading this article again I had asked you a question and you replied!

        I hope you could respond to this is a video if you have the time. Thanks so much!


        • Cool idea Nicole. I’ll definitely consider it!

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