Hopefully everyone who has access to a 401(k) is contributing to a 401(k). To not do so is a mistake you don’t want to realize when you’re old and grey. The government isn’t going to save you because, with a large Social Security funding gap, the government is having a hard time saving itself. In fact, the government will probably hurt your ideal retirement life by either raising the retirement age limit for receiving Social Security and Medicare, raising taxes, or both.
I only have 13 years of experience contributing to my 401(k) because I rolled it over to an IRA two years ago. But 13 years is long enough to realize plenty of things I’ve done wrong. My 401(k) mistakes have cost me probably close to $150,000 since I started, which equates to around 35% of my 401(k) amount when I left Corporate America. In other words, instead of having $400,000 in 2012, I could have had $550,000 had I optimized better.
There’s a chance you’re making the same 401(k) mistakes that I’ve made. This post is a reflection of such mistakes as well as the mistakes I’ve witnessed personal finance consulting clients and readers make throughout the years. Hopefully this post will make you richer down the road as we analyze each mistake and solve them together!