5 excuses that can ruin your retirement

With more than half of workers reporting less than $25,000 in savings, according to 2013 data from the Employee Benefit Research Institute, the reality of retirement saving is unpleasant for many Americans today. Worse yet, some of these savers may be compounding the problem by deluding themselves. 

Kenneth N. Bickford Jr., a certified financial planner at Bickford, Angier & Associates in Reno, Nev., says that some get discouraged because they misunderstand the nature of retirement saving.

“People think they need to save large amounts for retirement,” Bickford says. “What they don't understand is that it's about being consistent. Small amounts, when gathered consistently, can amount to a lot over time.”

But the misapprehensions don't end there. Savers may hold a number of questionable assumptions about their finances, and these can lead to them making faulty excuses for neglecting their retirement savings.

To salute America Saves Week (Feb. 24 through March 1), here are five excuses to avoid when planning your retirement.

1. “I've got plenty of time to save.”

In a sense, young people are right when they say that they still have years to save for retirement. But those years will only benefit them if they use them to build savings, says Bickford.

“One of the biggest assets young people have is time,” Bickford says. “But most of them aren't using it.”

According to the MoneyRates.com Retirement Savings Calculator, a worker who saves $100 per month in a tax-deferred account from age 35 until retiring at 65 will have amassed $83,225, assuming an average annual return of 5 percent. But if that worker started saving at age 20, that sum would be $202,644 - more than double the amount of the shorter savings period despite being only 1.5 times the duration.

Remember, however, that neither of those sums is adjusted for price increases. When adjusted by inflation, even the larger sum only amounts to $52,622.

2. “I've earned the right to splurge.”

 While there's nothing necessarily wrong with an occasional financial extravagance, Bickford says that some consumers today make extravagances the rule instead of the exception.