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3 Things You Shouldn't Do If You Want to Retire Comfortably

Only 25% of baby boomers think they'll have enough savings to last through retirement, a survey from the Insured Retirement Institute found. And considering the fact that half of U.S. adults age 55 and older have no retirement savings at all, according to a report from the U.S. Government Accountability Office, it's easy to see why so many older workers are concerned about their financial future.

Saving for retirement isn't easy, especially as costs continue to climb and retirement gets more and more expensive. And with several financial priorities fighting for your hard-earned dollars, it can be challenging to save for the future without ignoring your other responsibilities.

If you want to ensure you're saving enough to enjoy a comfortable retirement, sometimes it's not necessarily about what you do, but more about what you don't do.

Person handing over hundred dollar bills

Image source: Getty Images.

1. Don't wait too long to start saving

Saving for retirement isn't something you can do in a matter of a few years, yet 42% of workers say they'd rather not worry about it until they get closer to retirement age, a report from the Transamerica Center for Retirement Studies found.

The longer you wait to start saving, the harder you'll have to work to reach your goal. That's because when you begin saving earlier, compound interest is on your side. Compound interest -- which is essentially interest earned on your interest -- helps your savings grow exponentially as long as your money sits untouched in your retirement account. If you wait until you're just a few years from retirement, you'll have to do the bulk of the work yourself to see your savings grow.

For example, say you have a goal of saving $750,000 by age 65. If you start saving at age 30, you'll need to save around $450 per month to reach your goal, assuming you're earning a 7% annual rate of return on your investments. But if you wait until age 50 to begin saving, you'll have to stash away a whopping $2,500 per month, all other factors remaining the same.

While it's never too late to start saving, it's also never too early. The best time to begin is when you still have decades until retirement, because that will make it easier to accumulate hundreds of thousands of dollars in savings.

2. Don't play it too safe with your investments

When you're working hard to scrounge up hundreds of dollars per month to go toward retirement, the last thing you want is to lose that money by being too risky with your investments. However, too many people fall on the other side of the spectrum and play it too safe -- which can be just as harmful.

More than half (53%) of workers say they're stashing at least some of their retirement money in a savings account, according to a survey from Morning Consult. At first glance that may not seem like such a bad idea. Savings accounts are safe, and high-yield savings accounts can earn interest rates of 2% or more per year.

However, while they're great for short-term financial needs, they're not the best choice for long-term goals. With a rate of return of just 2%, your savings may not even keep up with inflation -- meaning your money could actually lose value over time if it's kept in a savings account. Not to mention that it's much harder to save a significant amount when you're earning only a 2% return.

Although some workers may be hesitant to invest in the stock market -- particularly those who are still recovering from the Great Recession -- it's the best way to save as much as you need for retirement. That said, you still need to be smart about how you invest your money. Rather than investing your life savings in a new tech stock you have a gut feeling will make you a billionaire, invest a little bit each month in index funds and mutual funds through your 401(k) or IRA. You won't get rich overnight, but it can help you maximize your savings while minimizing risk.

3. Don't expect to rely too much on Social Security

Social Security benefits can be a lifeline in retirement, particularly if your personal savings fall short of your goal. However, your benefits are intended to replace only around 40% of your preretirement income, so you can't expect to rely on them to cover the majority of your retirement expenses.

This is especially true now, as the future of the program is on shaky ground. While Social Security is not on the verge of collapse, and benefits aren't going away completely, your checks could potentially be cut in the next few decades. With baby boomers retiring in droves and retirees living longer than ever, there's more money flowing out of the system in benefits than coming in from taxes. By 2035 the Social Security Administration's trust funds are expected to run dry, so the only money that will be available to pay out in benefits is what comes in from taxes. As of now, that tax money will be enough to cover only about three-quarters of expected benefits, meaning benefits could be cut by up to 25% if Congress doesn't come up with a different solution by then.

The average benefit payout right now is around $1,471 per month, according to the Social Security Administration. It's hard enough for most retirees to make ends meet on that amount, but a 25% reduction could make it even more challenging to get by if Social Security benefits are your primary source of income.

To avoid this problem, make sure you're supercharging your savings before you retire. It's OK to rely somewhat on your benefits in retirement, but if they're your primary (or only) source of income, you could be headed for trouble.

Saving for retirement is one of the biggest financial challenges any worker will face in their lifetime, and even seemingly small mistakes could derail your entire plan. But by avoiding these common mishaps, you can set yourself up for long-term financial success.

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