Money Matters - More Dumb Money Moves: Common Mistakes Employees Make With Retirement Plans

BOSTON (CBS) - The Common Mistakes Employees Make With Their Retirement Plans -

Not contributing to their retirement plan because they don't like the choices. Even a mediocre plan is better than no plan especially if your employer matches

Choosing the "safest" investment, the one that appears to the most conservative without understanding that all investments have risk.

Basing investment choices on what the "company guru" has chosen for his portfolio, with investing one size does not fit all.

Putting all retirement assets into company stock. Not prudent to have more than 25% invested in company stock. Some experts will tell you at the max 10% but try to tell that to the Apple employees. The risk here is that there is no diversification. So your job and retirement are both tied to a single firm.

Cashing out your retirement savings when you leave your job. Over 50% of plan participants take the money and spend it rather than roll it into an IRA. Let's say you have $5,000 in you retirement plan and want to take it with you, the company is required to withhold 20% if you want to take your money out. So you'll get $4,000 to spend. If you had left that money in a tax deferred account for another 30 years and you got an 8% return, you would have over $50,000.

Borrowing from your retirement plan. Although you are paying yourself back if you should lose your job you will be required to pay back the loan in 30 days or it is considered a withdrawal. And the reason you borrowed was because you didn't have the money. Also you will be paying it back with after tax dollars and when you withdraw those funds in retirement you will be taxed on them again.

Not regularly checking account statements against pay stubs to be sure the account is being credited properly and your contributions are invested as selected.

Choosing the most aggressive investment thinking it will produce the greatest return

Making choices based simply on the number of funds. If the company offers 10 funds, putting 10% into each fund.

Making investment selections for a retirement plan without taking into account what else they own. They should be looking at their aggregate portfolio including a spouse's retirement plan as well as their personal investments.

Trying to time the market. This often leads to employees selling low and buying high.