Not taking full advantage of tax breaks
It's somewhat counterintuitive, but a person's actual investments can be less important than the types of accounts used for retirement investing. The tax-favorable 401(k) plans and individual retirement accounts, or IRAs, are a huge leg up in getting to retirement because they enable your tax-deferred earnings to compound. In addition, with traditional plans you generally get an immediate tax break on your taxable income each year you contribute.
At any point in time, less than one-half of the full-time, private-sector workforce has access to a workplace retirement plan, says Anthony Webb, research director at the Schwartz Center for Economic Policy Analysis in New York and former senior research economist at the Center for Retirement Research at Boston College. Of those who do have access to a workplace plan, about 20% choose not to enroll, he adds.
It's especially unwise to pass up the opportunity to invest in a plan when your employer matches a portion of your contributions. That's because you're passing up free money -- the equivalent of refusing a salary increase when it's offered.