My 8 Biggest Financial Mistakes

A housing development in Cranberry Township, Pa., is shown on March 29, 2024. Gene J. Puskar/AP

As a person who writes about investing for a living, it’s helpful (if humbling) to take a hard look at my own decisions from time to time. In the spirit of continuous learning and improvement, I present some of my personal shortcomings.

1) Roth Conversions

Whether from inertia or income restrictions (probably a bit of both), I never got around to setting up a Roth individual retirement account (IRA). Roth IRAs are especially attractive because they offer significant withdrawal flexibility: Assets can be taken out at any time without taxes or penalties. And in contrast to assets in a 401(k) plan or traditional IRA, Roth IRAs aren’t subject to required minimum distributions (RMDs), which currently kick in at age 73. For investors who have built up significant retirement assets, that can result in substantial tax bills because RMDs are taxed as ordinary income.

A person in my situation could get around some of these issues by setting up a backdoor Roth, which involves making a nondeductible contribution to a traditional IRA and then immediately transferring the assets to a Roth account. I haven’t made this tactic a priority. Instead, I'll probably take advantage of the window of time between whenever I retire and when RMDs kick in to convert some of my traditional IRA assets to a Roth account.

2) Late to the Party on HSAs

Health Savings Accounts (HSAs), which allow owners to contribute tax-free dollars, let them grow tax-free, and later pay for qualified medical expenses without paying taxes on withdrawals, were first introduced in 2004, but I didn’t start contributing to one until a few years ago. In retrospect, I would have been better off signing up for a high-deductible health plan and maxing out HSA contributions earlier.

3) No Long-Term Care Insurance

On a related note, I haven’t taken out an insurance policy for long-term care. The U.S. government’s Administration on Aging estimates that about 70 percent of people turning 65 will eventually need some type of long-term care. And long-term care is incredibly expensive. Women typically need 3.7 years of care, while men need care for 2.2 years. While in-home care can be a cheaper option, the cost of nursing home care in a private room averages about $108,000 per year.