Why Bad Habits Can Ruin Your Retirement Plans

bad retirement planning

Are you worried about bad retirement planning? A solid retirement plan is the end game of any individual wanting to free themselves of career-related responsibilities while still enjoying a comfortable life. However, having a good retirement plan may seem like miles away if one does not spend time to think of the future while acting on the present.

The current picture of retirement

This may surprise you, but most Americans only get to save 12% of what they need for their retirement plan. With debts on the rise and inflation rates skyrocketing, it may be quite a challenge to save money for the years ahead. Here are other interesting facts you may want to know about the status quo of retirees:

  • People ages 55 to 64 only get to save an average of $120,000 which is only 12% of the $1,000,000 recommended by most financial experts.
  • Individuals aged 65 to 74 only get to save $126,000 which is not much more compared to the lower age ranges.
  • Only 15% of the statistics state that they were able to save at least over 15% of their median annual salary for 7 years.
  • A shocking 20% report that they have not saved any money at all.

Disappointing as this may seem, only a minority get to reap enough savings well into their retirement, forcing them to work odd jobs and find other sources of income until they are aged past 60s or 70s.

The common causes of an insufficient retirement plan

There are many reasons why retirement plans seem insufficient for many people. Some of them may be reasons out of control, but most can be rooted into controllable factors. Unless you are someone who is unemployed, had a sudden accident or illness without insurance, or someone living below the poverty line, there can be ways to mitigate the costs of your daily spending to save money for retirement.

For many working Americans, the most common reasons why they fail to have enough savings for retirement include:

1. Incurring debt

When all spendings go through credit, it tends to eat up one’s income. Examples of incurring debt include mortgage, student loans, business loans, and other types of loans that people have throughout their lives.

Instead of allotting money for retirement, all savings end up going through loan or debt payments.

2. Poor spending habits

Financial celebrities like Dave Ramsey and Suze Orman frequently talk about poor spending habits. Some Americans have the Epicurean mindset when it comes to spending–“you only live once, why not spend it all?” Once a paycheck is received, they tend to think of the next purchase in line even when it seems unnecessary. This could be in the form of latest gadgets, clothes, and other miscellaneous things that one can live without if worse comes to worst.

Poor spending habits stem from the consumerism culture that many of us seem to feed into. Items that bring us a sense of heightened status or some form of comfort may be put on a pedestal instead of using the money spent in more practical purposes.

3. Lack of urgency

The insufficient retirement plan for many people may not come from external influences, but rather something internal. Many Americans would think that they do not need retirement funds unless they face a dire situation themselves.

When we’re in good health, the thought of being unable to earn an income may be far from our minds. However, this same mindset is what troubles people when they are well into their 60s, sick, unemployed and unable to fund their day-to-day expenses. In order to have a good retirement plan, working Americans should have a sense of urgency when it comes to saving for the future.

4. Poor health habits

Believe it or not, we spend most of our income taking care of our bodies. The majority of our income is spent on food, and a large chunk will be spent if we encounter any health problems. This is why habits such as smoking or binge drinking can incur more expenses, much more so when you suffer the complications of chronic diseases.

Health is, indeed, wealth. The more that you can take care of your body, the longer you can stay employed, maximize your retirement savings, and get rid of unnecessary spending with things that can harm you.

In this post, we will be focusing on how health habits affect your retirement plan. Now, how do these poor health habits ruin your plans to save for the future?

How do bad habits ruin your retirement plan?

1. You tend to lack foresight

When you indulge in bad habits, you tend to lack foresight about many things. This can include foresight on expenses, health, relationships and other factors that will help contribute to a better retirement plan.

Let’s say you are someone who has been smoking in your mid-20s. Since cigarettes have been a part of your life, you don’t actually have the mindset to look ahead with how much you can save cutting out on this habit, much well so avoid health complications caused by it. This may be very risky if you are someone who lives on paycheck to paycheck.

2. You allocate lesser funds for things that truly matter

If you take time to contemplate in your life, what are the things that truly matter to you. If you indulge in poor health habits such as excessive drinking, is this more important than your partner, family, career, or something else that gives you joy?

Note that true joy and contentment doesn’t stem from satisfying a habit that harms you or the people around you. It comes from being in control of your life and using your resources for the things that truly matter to you. If you spend less on bad habits, the more you can give time, effort, and monetary spending on things that can bring long-term satisfaction.

3. You may suffer from health complications

Not only do bad habits cause you to think less about what matters, it also causes you to suffer from health problems. As mentioned earlier, poor health habits are like stepping stones to chronic diseases. Smoking, drinking, or substance abuse are liked to coronary heart disease, liver problems, lung problems, and even mental health issues that can cost you a lot of money as you age.

Nobody wants to age with poor health, because not only does it affect your quality of living, but it also can sabotage your plans of saving for the future. Retirement savings are allocated for your day-to-day expenses as you are past through the employment stage of your life. If you put in the factor of being sick during this stage, you may end up spending more than what you have planned for.

4. You tend to accumulate debt

When your spending priorities are skewed, you may end up making debt-related decisions that are not good for your retirement plan. For example, spending your paycheck on bad habits will lead you to apply for short-term loans to cover some expenses for the month. These short-term loans have high interest rates that can even exceed your expectations.

This leads to a downward spiral of debt against debt, pushing the retirement plans away in the background.

There’s no shortcut to proper retirement planning

When it comes to thinking about saving for the future, there’s really no cheating through it–you need to have good spending habits, be in your best shape as an employed individual, and have your priorities in check.

This same mindset should be applied to securing life insurance from the best life insurance companies. The financial security for your loved ones needs to be a priority. No matter if you’re wanting cheap term life insurance or a basic final expense policy – you can’t put it off.

This way, you can be one of the people who can breathe a sigh of relief once your career ends, your retirement begins and your final expenses are taken care of.

About the author: Patrick Bailey is a professional writer mainly in the fields of mental health, addiction, and living in recovery. He attempts to stay on top of the latest news in the addiction and the mental health world and enjoy writing about these topics to break the stigma associated with them.

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Michael Quinn LIB

About Michael Quinn

Michael Quinn is the cofounder of Life Insurance Blog and a multi-state licensed life insurance agent. LIB has helped thousands of people understand life insurance and secure affordable coverage.

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