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For many Americans, their 401(k) balance is a sobering reminder that good intentions don’t always lead to good outcomes.
Perhaps you planned to increase your retirement savings each year, but instead succumbed to immediate gratification and upgraded to a nicer car each time you were promoted. Or you charged family vacations to your credit card but never fully paid them off. Maybe you diligently funded your retirement account, only to borrow from it to pay for costly home repairs because you didn’t have an emergency fund to cover the expenses.
Alex Nabaum 
The result: Instead of accumulating the recommended six times your annual salary in your retirement fund by age 50, you have less than $100,000 saved and fewer than 20 years to finance what could be a decades-long retirement.
If this sounds familiar, you’re not alone. Nearly 60 percent of those who are saving worry that they aren’t putting aside enough money for retirement, according to a 2024 Bankrate study. And in a 2024 AARP study, about one-quarter of U.S. adults over the age of 50 who are not yet retired said they would never be able to.
Despite 73 percent of private sector, state and local government employees having access to an employer-sponsored retirement plan, just 56 percent participate, according to the U.S. Bureau of Labor Statistics. And many people who do sometimes cut back or stop their contributions to offset inflation and unexpected expenses — or when there is uncertainty in the market. According to a 2025 Morgan Stanley at Work report, nearly four in 10 employees surveyed earlier this year said they reduced their 401(k) contributions in reaction to current economic worries, which isn’t always advisable.
Financial experts have identified five common habits that sabotage retirement savings, all stemming from our tendency to choose immediate gratification over future financial security. Here’s a closer look at these money missteps that can undermine long-term financial health — and practical strategies to overcome them.
1. Increasing Your Spending as Your Income Grows
As we make more money, we tend to spend more money because our perception of our personal wealth changes, and we think we have more than we do.
“It’s a much harder transition to start saving versus spending more when we get a raise,” said Dana J. Menard, the founder of Twin Cities Wealth Strategies, in Maple Grove, Minn. If you want to fend off lifestyle creep — gradually increasing your spending as your income grows — make a plan to use a portion of your raise to either increase savings or pay down debt before extra money hits your bank account, he said.
“Most of us cannot and should not rely on willpower to instill good financial habits,” said Ariana Alisjahbana, a lead adviser with North Berkeley Wealth Management in California. She suggests setting up your 401(k) contribution to automatically increase 1 or 2 percent annually in anticipation of receiving a raise.
2. Not Tracking the Small Stuff
The average consumer spends $118 a month on food delivery and $78 a month at coffee shops, according to a 2023 survey of 1,000 U.S. adults by Empower, a financial services firm.
When we think about expenses, we often focus on big-ticket items like our rent or mortgage, grocery bills and car and student loan payments, but smaller convenience costs can add up quickly. If you’re looking for ways to save, these minor expenses are a good place to start.
Each month, review your spending by listing all expenses on a spreadsheet, said Melissa Caro, the founder of My Retirement Network, a New York media company focused on retirement planning. Track every expense: from daily coffee and takeout delivery fees to major monthly bills like rent or mortgage, insurance and utilities. Don’t overlook streaming subscriptions, cellphone plans, internet services or groceries. Include bills on automatic payment. “When you see all the numbers on one page, it’s usually when something jumps out at you,” Ms. Caro said.
For instance, we rarely question our monthly cellphone or utility bills, but it’s not unusual for these costs to inch up over time. When Ms. Caro noticed her cellphone bill was steadily increasing, she called to ask why and learned she was using an older, more costly service plan. The provider offered her a new plan that allowed her to save $75 a month, which she used to replenish an emergency fund after spending thousands of dollars on a home repair, but that money could have been moved into a retirement savings account.
3. Continuing to Use Credit Cards While Carrying a Balance
Carrying credit card debt, a student loan and an auto loan can overwhelm borrowers, leading them to make only the minimum monthly payment. Most consumers don’t realize that the minimum payment on a credit card barely covers the interest rate charges, Mr. Menard said, which on average currently range from 21.16 percent to 22.73 percent. “If you keep paying the minimum, the chances are you’re never going to pay that balance off,” he said.
Total U.S. household credit card balances reached $1.18 trillion at the end of May 2025, according to the Federal Reserve Bank of New York.
Getting out of debt becomes even harder when you keep charging items to your credit card. “The ability to just grab your phone, tap a few times and have something sent to you that day, within a couple hours, makes it a lot easier to overspend and to do so without truly thinking it through,” Mr. Menard said.
Greg Guenther, chief executive and co-founder of GRANTvest Financial Group, a financial planning firm, said about 25 to 30 percent of his clients seek assistance with debt management. “They know they have a problem and know they need help,” he said. For example, his clients frequently spend excessively on the newest smartphone upgrades. “That’s $800 to $900 every year that could easily add up to tens of thousands of dollars in a retirement account with the help of compounded interest,” Mr. Guenther said.
When it comes to paying down credit card debt, there are two primary strategies. The mathematically optimal approach is to focus on the card with the highest interest rate first, in order to minimize the total interest paid over time. However, Mr. Menard recommends paying off the card with the smallest balance first, because it provides a psychological win that can motivate clients to continue paying down debt. “Taking a small win will get the momentum going,” he said.
4. Failing to Create an Emergency Fund
Everyone needs an emergency fund, even if you’re living with your parents or renting and don’t have a mortgage. An emergency fund acts as a financial buffer against unexpected job loss, medical bills and car repairs.
When we fail to set up an emergency fund, we’re more likely to withdraw funds from our retirement account, incurring penalties and losing compound growth, said Melinda Satterlee, the founder of Marathon Wealth Management in Medina, Wash. Too often clients don’t consider the downside of borrowing from a 401(k) plan. “They think, ‘This is money I’m saving, I can access it,’ but they’re not told how much that will cost them,” she said.
For instance, if you withdraw $5,000 from your 401(k) before turning 59.5, the I.R.S. will impose a 10 percent penalty of $500. Assuming a 22 percent marginal tax rate, you would owe an additional $1,100 in taxes on the withdrawal. In total you would pay $1,600 in fees, netting you only $3,400.
But the cost isn’t just financial. When you take money out of a retirement account early, you’re also “pushing your retirement planning out further,” Mr. Menard said.
5. Spending Windfalls and Other Unexpected Income
A bonus or a tax refund is a painless way to build up an emergency fund or pay down debt.
Ms. Caro recalls using the bonus from her first job after college to pay off her student loan in full. “The fact that I still remember that says something to me, whereas I’m sure if I bought a new outfit, I would not have remembered it as well,” she said.
Each year on Jan. 1 or on your birthday, create a “windfall plan” that outlines exactly how you’ll allocate any unexpected income, Ms. Alisjahbana said. Document specific percentages to be used for debt reduction, emergency savings and possibly a small splurge. Having a written strategy in place before receiving any unexpected money prevents impulsive decisions and holds you accountable to your long-term financial goals.
If you don’t have a plan and receive unexpected income, wait 30 days before deciding how to use it, Ms. Alisjahbana said. One of her clients recently won a court settlement from an injury and received a sizable amount of money, but lacked a windfall plan. Ms. Alisjahbana encouraged the client to wait 30 days. The client agreed and ultimately decided to put most of the funds into her children’s 529 accounts, to save for their education. “Having time to think through and weigh your needs versus your wants will likely increase your odds of doing the right thing,” she said.
The cumulative effect of overcoming these five behaviors can be transformative for your retirement nest egg. “Small choices can snowball into big changes,” Mr. Guenther said.