Five ways to avoid killing your retirement dreams

Want to retire? Watch out for these retirement killers and avoid them by doing the right things …

Each year, every year, I get a year older. Likely the same is happening to you.

And although I'm incredibly thankful for my job, I envision a time when (a) I may choose not to do it anymore, or (b) I simply won't be able to do it anymore.

At its simplest, retirement is a money thing, not an age thing. “Retirement age” may (traditionally) be 65, but without the money in place to back it up, it isn't going to be pleasant. Either you have the money set aside to perform the final act of your life without the income from a job, or you don't.

5 retirement killers — and what to do instead

There are lots of ways to utterly and completely screw up your chances of retirement, but here are five ways way up on the list.

It's not all bad news, though. I'll offer up some antidotes to these grim outcomes.

Retirement Killer #1: Count on anyone to provide for you in your old age

Are you expecting a big inheritance? Medical bills or a change of heart can change that expectation in a heartbeat.

Expecting those pension checks to keep coming? Companies are looking for any excuse to hang retirees out to dry.

Expecting your Social Security check to keep coming? It may come, but all you might be able to buy with your monthly check is shattered dreams.

What to do instead: Review where you stand with your retirement planning. Talk with a financial advisor, or at least punch your numbers into an online retirement calculator (Personal Capital will let you start doing this for free). Do a lot of what-ifs and make sure that your bases are covered.

Retirement Killer #2: Make lax assumptions on how much you need to save

You can assume an 8% rate of return over 25 years. You can assume inflation will be at 3%. You can assume that your home will be worth $1.5 million when you want to sell. You can assume that you'll have 4% annual raises.

But should you?

Many, many things can derail these assumptions. What may have been a good assumption five years ago is a horrible assumption today.

What to do instead: Make some assumptions based on what you see, but review them regularly as a sanity check. If the assumptions aren't good anymore, adjust your expectations and change your plan.

Retirement Killer #3: Idling away time off of work

I get that not everyone is in a position where they can clock out after eight hours.

But if they are, why does productive work need to stop there? It doesn't.

I look back at all the time I've wasted, and it disgusts me. How much I could have accomplished in that time is staggering. (Time spent with my family or for charitable causes isn't wasted. The time I'm talking about is stuff like puttering around, watching TV, playing games, etc.)

Time is something that goes by once, and never comes back again.

Robert Pagliarini observed in his book The Other 8 Hours that our weekdays are divided roughly into thirds: eight hours for work, eight hours for sleep, and eight hours for everything else.

It's what we do in those “other” eight hours that makes the difference. If three of those hours each weeknight, week after week, month after month, are spent binge-watching Netflix, that's 60 hours a month that could have been used to build up a highly profitable side business. But it wasn't.

What to do instead: I understand that watching TV is beaten to death as a giant time-suck, but everything in moderation. Maybe take a little longer to get through The Office and spend more of that “found” time building up a side income stream. This has the added advantage of making the TV time more special because it's no longer merely a habit.

Retirement Killer #4: Live beyond your means

The magic of compounding lets people of modest means become millionaires.

It also works on the other side of the ledger to siphon away wealth from people who live beyond their means and makes banks billions at their expense.

Carrying a balance on a credit card (or a car loan, or a student loan) weighs you down for years and robs you of your capacity to save for retirement.  Everything is more expensive if it's financed, and your extra money goes to paying off that interest instead of fattening your nest egg.

What to do instead: This one's straightforward: Live within your means. Pay off debt that you have, and spend less than you earn.

Retirement Killer #5: Believing that retirement is about age

If you had $10 million in very safe investments earning 5% per year, you could draw $500,000 per year without touching the principal.

Wouldn't you think about quitting? Would it matter what age you were? Of course not! (Heck, I could draw less than half of that, still be living large, and get richer each year!)

Retirement is not about age. It's about money. The more you have, the more quickly you'll have the option to retire.

What to do instead: Don't look forward to age 65, or age whatever. Look forward to, and plan for, the means to provide income on your terms, whether that's working a full work week, part-time, or not at all. Retirement is about money, not age.