7 retirement investing mistakes
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 investing for retirement. 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, a senior research economist at the Center for Retirement Research at Boston College. Of those who do have access to a workplace plan, about 20 percent choose not to enroll, he adds.
It's especially foolhardy 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.