5 Red Flags You’re Not Saving Enough for Retirement

We recently published an article on “super-savers”—those rare birds who worry about saving too much for the future.

If you read that and thought, “It must be fun to have that problem,” this article is for you.

The sad truth is that most Americans are woefully unprepared for retirement. Not only do they miss their goals; they don’t even have goals. They crossed their fingers and hoped that everything would be fine.

Hope is not a financial strategy.

If you’re worried about falling behind, you need to face the facts now, while you still have time to adjust. Here are five flashing red signs that your current savings plan isn’t going to cut it.

1. You don’t know what your ‘number’ is

If I were to ask you right now, “How much money do you need to retire comfortably?” what can you say?

If your answer is “a million dollars,” “a bunch,” or a blank stare, you’re not seeing it. You can’t hit a target you didn’t define.

Many people avoid this figure because it scares them. They fear that the number will be too big and it discourages them. But ignoring it doesn’t make it go away.

You need to sit down, look at your current expenses, estimate what will change in retirement (maybe no mortgage, but high health care costs), and use a reputable retirement calculator.

You need a concrete goal, even if it’s a rough outline.

2. Your retirement plan is ‘Social Security’

Social Security is a safety net, not a hammock. It was never intended to be the only source of income for retirees.

According to the Social Security Administration, the average monthly retiree’s benefit for 2026 is $2,071.

Can you live on $1,900 a month right now? That must include housing, food, utilities, transportation and health care. For many people, living on Social Security alone means a significant drop in their standard of living, walking closer to the poverty line. If you don’t have a significant nest egg to supplement those government checks, you’re headed for a very difficult retirement.

3. You leave ‘free money’ on the table at work

This is one financial mistake that hurts employees the most.

If your employer offers a 401(k) match—for example, they match the first 5% of your salary that you contribute—and you don’t contribute at least that 5%, you’re essentially denying yourself a 100% immediate return on your investment.

There is no other place in the financial world where you are guaranteed to double your money instantly. I don’t care how tight your budget is; you need to find a way to find that game. If you’re not, you’re volunteering to take a pay cut.

4. Save a fixed dollar amount, not a percentage

Maybe you set up automatic transfers of $200 a month to your IRA back in 2015. You feel good because it works on autopilot.

The problem is inflation. That $200 bought far less in 2023 than it did in 2015. If your income has increased over the years but your savings rate remains low, your savings rate has actually decreased.

You should aim to save a percentage of your income—experts often recommend 15%—so that as your income increases, your savings automatically increase. If you get a raise, your retirement fund should get a raise too.

5. You treat your 401(k) like an ATM

When a financial emergency strikes—a broken transmission, medical debt, a leaking roof—it’s tempting to look to that large balance in your retirement account as a lifeline.

Don’t do it.

Raiding your retirement funds early is disastrous on many levels. First, if it’s a 401(k) or traditional IRA, you’ll likely pay income tax and a 10% early withdrawal penalty to the IRS. You may withdraw $10,000 but only keep $7,000.

Second, and most importantly, you interfere with compound interest. That $10,000 you take out today is not just a $10,000 loss; it is a waste of what that money would have grown to in the next 20 years. Build a separate emergency fund to keep your retirement savings locked away.

An important point

If you know you are on this list, don’t panic. Panic leads to paralysis. Instead, take action. Start slow if you have to. Increase your 401(k) contribution by 1% today. Open an IRA. Do the math. A good time to start saving was twenty years ago. Second best season yet.