No-no's for retirement planning. .

The collapse of Enron, Global Crossing, K-Mart, and other high-profile companies has dramatically highlighted the risk of investing too much in company stock in 401(k) and similar employee-funded retirement plans. However, workers often make other miscalculations as well in these plans. Following are common mistakes cited by many Certified Financial Planner professionals:

Failing to participate. According to the Profit Sharing/401(k) Council of America, 20 to 25% of eligible workers don't participate in available 401(k) plans. This means they are missing out on one of the most-tax-effective ways to save for retirement and could end up depending mostly on Social Security benefits when they retire. Failing to participate is especially costly since seven in 10 employers match up to a certain amount of each employee's contribution, according to the Council. Failing to join essentially means passing up free money.

Failing to save while waiting. The majority of 401(k) plans don't allow you to join the plan until you have worked for the employer for a year, and many require you to be at least age 21. If that is your situation, set aside money each month in a savings account. Then, when you join the plan, you can use this extra savings to supplement your family's cash flow so that you can maximize your regular 401(k) contribution over the next year.

Failing to contribute the maximum possible. Not every employee can afford to contribute the maximum allowed by the plan, but many don't contribute the maximum they can afford to put in. The average 401(k) participant contributes less than seven percent of pretax salary, according to the Employee Benefit Research Institute, although plans usually allow higher limits of, say, 15 or 20% of gross pay up to a set limit. At the very least, contribute enough to maximize the employer's matching contributions, but put in more if you can.

Not adjusting automatic enrollment. An increasing number of 401(k) plans automatically enroll workers, unless they opt out. This increases the participation rate, which is good. However, participants often fail to adjust the enrollment's initial default choices. Consequently, they probably aren't contributing as much as they can afford to, and the investment defaults are likely too conservative. Take the time to make adjustments.

Poor diversification. The average 401(k) plan offers around 10 investment choices. This is...

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