We all know that having a to-do list can help in planning. Sometimes a “do-not-do” list can be equally important. Here are a dozen common pitfalls to avoid so that your financial planning for retirement can be more successful.

1. Impulse investing – Avoid investing based on a whim or a tip. Don’t invest a certain way just because a friend or colleague does. Instead, be thoughtful and strategic.
2. Lacking an overall plan or strategy – Don’t look at financial decisions in isolation. Think about how they affect or are impacted by other elements. For example, when deciding on asset allocation, keep all of your investments in mind, not just those in a particular account.
3. Not paying yourself first – Retirement savings should be a top priority. Put money aside with every paycheck. It’s easy to do through payroll deduction or a similar automatic system.
4. Not taking advantage of time – Compound growth is like a gift from Father Time. Start saving for your retirement now, and you gain an opportunity for tremendous potential growth. That way you may not have to save significantly more later in your career, when many financial needs compete for your attention and your budget.
5. Not paying attention to risk – Risk and return tend to go hand in hand. Investments that offer higher potential returns, such as stocks, have elevated levels of risk. Conservative investments, such as money market funds or stable-value investments, fluctuate very little, but offer limited growth potential. Think about risks as well as expected returns.
6. Not diversifying – The more concentrated your investments, the higher the potential risk. It is like putting your eggs in one basket. If the investment doesn’t work out, you stand to lose more than if you were diversified. Limit your risk by owning a variety of investments, and don’t invest too heavily in your employer’s stock.
7. Trying to manage your investments alone – A financial professional can be one of your best allies when it comes to retirement planning. He or she can help you develop a comprehensive, holistic plan that addresses all of your goals and needs — and takes care of the people in your life who are important to you.
8. Not working together with your spouse – By talking about their individual financial goals and coordinating their investment strategies and budgetary practices, couples are in a better position to optimize their financial resources for retirement.
9. Not maximizing your retirement plan – If you are fortunate enough to have an employer-sponsored retirement plan, take advantage of it. If you receive a matching contribution from your employer, contribute at least enough to the account to qualify for the full match. Anything less is like walking away from free money.
10. Cashing out or borrowing from your 401(k) account – In a financial emergency, you might have no choice but to make an early withdrawal from your 401(k)-retirement account. But doing so is like borrowing from your future to pay for your present needs. Look for alternatives before you resort to that.
11. Ignoring tax or inflation when estimating your net retirement income – For anything other than a tax-advantaged account, such as a Roth IRA or Roth 401(k), you’ll owe taxes on your withdrawals. Remember that inflation will reduce your purchasing power as well.
12. Not tracking your investments – Monitor your investments to make sure they are performing roughly as you expect them to do. If they are not, try to understand why, and be ready to make changes if you need to.

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