The $11,600 Mistake You May Be Making With Your Retirement Savings
The Motley Fool
by newsfeedback@fool.com (Maurie Backman)February 20, 2026
AI-Generated Deep Dive Summary
The article highlights a critical oversight that could cost individuals up to $11,600 annually in potential tax savings related to their retirement planning. This mistake often arises from failing to fully utilize tax-advantaged accounts like traditional IRAs or 401(k)s, which allow pre-tax contributions and defer investment gains until withdrawal. By not leveraging these benefits, savers may miss out on significant tax advantages that could bolster their retirement savings.
The article explains how traditional IRAs and 401(k)s work: contributions are made with pre-tax dollars, lowering current taxable income while allowing investments to grow tax-free. This setup can lead to substantial long-term growth compared to taxable accounts. Additionally, the deferred taxation on investment gains means that taxes are only paid when withdrawals occur, typically during retirement when income might be lower.
The importance of maximizing contributions to these accounts is underscored by the potential annual loss of $11,600 in tax benefits for those who don't contribute the maximum allowed. This figure serves as a wake-up call for individuals to evaluate their retirement savings strategies and ensure they are taking full advantage of available tax breaks.
For anyone interested in optimizing their financial planning, understanding how these accounts can reduce taxable income and enhance long-term growth is crucial. The article emphasizes that while Social Security will play a role in retirement income, personal savings through efficient vehicles like IRAs or 401(k)s are essential for ensuring financial security in the golden years.
In conclusion, the article stresses the need to avoid the $11,600 tax-saving mistake by fully utilizing pre-tax retirement accounts. This approach not only maximizes savings but also positions individuals to enjoy greater financial flexibility and stability during retirement.
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Originally published on The Motley Fool on 2/20/2026