4 Roadblocks To Achieve Retirement Savings Goal

roadblocks retirement savings

Do you know that the national average retirement savings balance for all ages is $95,600 according to Fidelity? If you review the data further, the average retirement savings balance is $160,000 for age groups 50 to 59 and $182,100 for age groups 60 to 69. These average retirement savings may seem like a lot, but they may not be enough to retire in comfort. According to the most publicized and endorsed Trinity Study (“the 4% rule)”, if a retiree needs $40,000 from a portfolio for 30 years, he/she will need a $1 million dollar portfolio. The total amount will depend on lots of other factors such as duration of retirement, inflation, and allocation of assets within the portfolio to name a few. So what prevents us from reaching our retirement savings goals. Here are 4 roadblocks that would prevent you and me from achieving the retirement savings goal. 

Roadblock #1: Spending more than what you make

When you spend more than you take home, you go deeper into debt and lose the opportunity to invest money for your retirement. 

For instance, you want to buy a large screen TV for $2,000, but you don’t have $2,000 in the bank. So you use a credit card with an annual interest rate of 20% to purchase the TV. On that loan, you are planning to make a payment of $50 per month. Do you know how long it will take you to pay the loan? Hold your breath….approximately sixty six months! The estimated interest on a $2,000 loan would be $1,300. That is a whopping 65% of the initial purchase price of $2,000! This is a bad financial decision. If instead you invested $1,300 at a 6% compounding interest, after 40 years that money would be worth $13,371.

Is this type of spending in your control? Yes!

You could choose to live like a college student for a few years after graduating to accelerate your savings. For example, you could live with a roommate to reduce rental cost, drive the same old car you have been driving, delay the purchase of a large screen TV until you accumulate enough money, or delay taking a vacation until you save up for it.

I recommend creating a realistic budget and tracking your spending, which will help you establish a baseline and set up short-term and long-term financial goals.

Roadblock #2: Lack of financial education

I’m not talking about learning how to read a balance sheet or profit and loss statement or understanding how cash flow works. I am talking about learning about different investment options such as stocks, bonds, mutual funds, and exchange traded funds. In addition, you should consider learning about tax-sheltered accounts such as 401(k) and Roth IRA and their benefits. Moreover, learn about investment allocation and how to invest your savings in these tax-sheltered accounts

One of the best resources to educate yourself is The Bogleheads’ Guide to Investing by  Lorimor, Lindauer, and LeBoeuf. This book is for anyone who wants to learn how to invest money on their own (Do-It-Yourself, DIY investors). The book provides guidance toward simplistic investment strategies.

Roadblock #3: Fear of investing

If you have never experienced a bear market, you would not understand how it feels to lose money – even on paper. It is one thing to read about a 40% to 50% drop in the equity market, and another to experience actual “paper” loss of your investment. In my first professional job after college in 1998, I got introduced to a 401(k) retirement account. At that time, I decided to invest 20% of my income in a 401(k). I was feeling good as my equity investment was going up year-after-year for a couple of years. Then, the tech bubble happened in 2001-2002, and my 401(k) balance went down a significant amount. I made an irrational decision and sold my equity investment and bought low-return fixed income investments, in the fear of losing more money.

The fear of losing money also prevented me from re-entering the equity market for a few years, resulting in a loss of opportunity. In a behavioral finance term, I became a victim of loss aversion (focusing more on avoiding a loss than on making gains). Eventually, I got back on track! If I had learned about the financial history of the equity market or understood my risk tolerance and picked a more conservative allocation, I may have “stayed the course”. One of the ways to tame the fear of investing is to educate yourself with financial history and adjust your allocation based on your risk tolerance.

Roadblock #4: Ourselves

That’s right!  We are one of the roadblocks which prevents us from achieving our retirement savings goals. We are our biggest enemy when it comes to long-term investing. Even after educating ourselves and understanding the benefits of “staying the course”, our behavior sometimes takes over and we start to go off-track. For example, we try to chase the best performing asset class disregarding our financial policy or take more risk with investment disregarding our risk tolerance or get greedy and try to time the market. 

I became a victim of market timing during 2007-2008 by selling some of equity during the market decline and booked actual loss. Why? Hadn’t I seen this before (2001-2002)? I did what I did because most around me were doing it! I became a victim of herd mentality bias (followed what other investors were doing). At times, we lack the discipline to stay true to our financial goals. Instead of thinking that our investment time horizon may be in the decades, we start thinking short-term. This roadblock too is in our control, but for me, it is one of the most challenging to overcome.

We Will Be Responsible For Our Retirement Savings! 

I encourage you to self-assess and make every effort to remove roadblocks that prevent you from achieving your retirement savings goals because ultimately, we are responsible for our own retirement.

Gone are the days of pension (i.e., defined benefit plan) which provided steady income for many a generation before. What about social security? Well, more than likely, we will receive some portion of social security at retirement age even though there are numerous reports raising concern of depleting the social security fund by 2035. With no pension and possibly lower social security benefit, it is important to make a plan in our 20s to ensure a comfortable retirement.

We are responsible for building our wealth to generate a steady income in our retirement.


Now that we know about the four major roadblocks preventing us from achieving our retirement savings goals, are we going to make all the right decisions? I certainly did not. The goal of this post is to explain what to look for and what to avoid. But we have to build the discipline required to achieve financial success ourselves. This blog and other resources can provide the map or guidance, but we have to make the journey towards financial independence ourselves.

Have you experienced any of the four roadblocks? How did you overcome your roadblocks?


  • Tanvi Shah

    That large screen TV can definitely wait if you don’t have the cash on hand…the same TV may be 1,200 if you wait a few months anyway 🙂

    • Very true about TV price going down if you just wait, but sometimes instant gratification takes over: – ) Due to huge increase in manufacturing capacity the price of electronic items has been going down. We will see how this pandemic will affect pricing due to decline in manufacturer capacity in the short-term.

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