4 Retirement Savings Mistakes You Can't Afford to Make

If there's one thing I've learned from years of studying personal finance, it's this: Building wealth is less about doing all the right things and more about avoiding a few key wrong things.

The good news is most mistakes are fixable. And the earlier you catch them, the more your money can grow.

Let's walk through the biggest retirement savings mistakes I see -- and, more importantly, how to avoid them.

1. Waiting too long to start saving

The biggest advantage you have in retirement planning is time. But too many people don't start saving until their 30s, 40s, or even later.

The earlier you start investing, the more your money has a chance to snowball thanks to compound growth.

Here's what your savings could look like if you invest just $500 per month, assuming an 8% annual return:

And if you invest $1,000 a month instead? You can double those numbers.

The takeaway is the sooner you start, the less you need to save later. Even small contributions add up when you give them time to grow.

If you're late to the party, it's not too late to show up. Yesterday might have been the best time to invest, but the second best time is today.

2. Trying too hard to beat the market

The internet loves a good get-rich-quick story. But in real life, slow and steady wins.

Case in point: There are now more 401(k) millionaires in the U.S. than ever before, according to Fidelity. Most of them didn't make flashy investments. They stuck to a simple plan and let time do the heavy lifting.

Low-fee, diversified investments (like index funds and target-date funds) are the foundation for many of these long-term success stories. These funds tend to have low fees (less than 0.5% of your investment, usually) and solid long-term returns.

In fact, from 1926 through early 2025, the S&P 500 Index has returned an average of about 10% per year. If you buy an S&P 500 index fund, you'll own a piece of all 500 companies and share in their long-term profits.

Almost all online brokers offer index and target-date funds, and they're usually included in workplace retirement plans, too. If you're not sure where to start, these are great options to explore.

And there's no harm in getting a second opinion or having an expert review your retirement portfolio.

A short questionnaire from our partner, SmartAsset, helps match you with up to three fiduciary financial advisors, each legally bound to work in your best interest.

3. Using the wrong retirement account types

Putting all your retirement savings into taxable brokerage accounts can limit your growth.

Instead, investing through tax-advantaged retirement accounts can help your money grow much more efficiently.

If you're earning decent income now and expect to be in a lower tax bracket later, a traditional 401(k) or IRA might give you the biggest tax break. Traditional 401(k)s and IRAs give you an upfront income tax break, but you'll pay income tax on your future withdrawals.

But if you think your taxes will be higher in retirement -- or you just prefer to take future income tax out of the equation -- a Roth IRA could be the better choice. With Roth accounts, you pay taxes on the money you contribute now, but you can withdraw money tax-free later.

4. Taking bad advice (or no advice at all)

When it comes to retirement, bad advice can be expensive. And no advice can be even worse.

It's easy to fall into the trap of listening to a friend, a social media influencer, or your cousin who "knows a guy." But personal finance is, well...personal. The best plan for someone else might not be the best plan for you.

Even if you've been doing things on your own so far, there's real value in having a second set of eyes on your plan -- especially from someone who's trained to spot gaps and opportunities.

The right advice can help you retire sooner, save more, and sleep better.

Our partner SmartAsset's secure quiz matches you with up to three fiduciary financial advisors who have passed a rigorous vetting process.

If you're serious about building a future you're excited about, don't leave it up to chance.