A strong economy, coupled with a rising stock market, provided steady increases in the average 401(k) account between 2010 and 2020. That trend seemed to continue in 2021, however, account balances began to shrink due to market volatility and inflation in 2022. According to a 2023 Fidelity Q2 Retirement Analysis, the average 401(k) balance increased by 4% from $108,200 in Q1 of 2023 to $112,400. In addition, the average IRA balance went from $109,000 in Q1 2023 to $113,800 in Q2 2023.

Most workers know that there is little that they can do to improve the country's economic performance, and predicting the stock market's performance is a challenging task. What workers know they can do is to focus on their retirement savings strategy. With the proper focus, your retirement years can be comfortable, allowing you to travel, spend time with your grandchildren or take up new hobbies. However, this will not happen if you spend these years worrying about money.

Fortunately, you can boost the odds of a happy retirement by avoiding some of the most common retirement savings mistakes.

New Workers

Not saving early enough: It is easy to forget about planning for retirement when you first start working. After all, you have other expenses -- rent, maybe a mortgage, furniture, clothing -- that you need to cover. With that said, those who start saving early for retirement will end up with significantly more money in their retirement years.

In their article Penny Saved, Penny Earned, Vanguard Group researchers Maria Bruno and Yan Zilbering show how vital saving early is.

According to their research, investors who saved 6 percent of their salaries in a portfolio split evenly between stocks and bonds starting at age 25 enjoyed a median portfolio balance at retirement of nearly $360,000.

That figure fell to $237,000 for investors who waited until 35 to start investing and $128,000 for those who waited until age 45.

Not maximizing the match: If you work for a company that offers a 401(k) program, you need to participate in it. These programs provide a relatively pain-free way to build your retirement savings over time. Don't make a mistake many young workers make, though: Maximize your employer's match. You will miss those extra dollars when retirement arrives if you do not.

Running up debts: It is easy to run up credit card debt. However, remember, it is not easy to comfortably retire when carrying a heavy debt burden. Begin wise spending habits -- only charge what you can afford to pay back when your next credit card statement arrives -- at a young age. They can save you a world of financial pain as retirement nears.

Middle-Age Workers

Borrowing money from your retirement accounts: Borrowing money from your retirement accounts is a terrible financial decision. You will sometimes pay severe tax penalties to withdraw funds early from these accounts. Even worse, though, is the toll early withdrawals take on your future savings. If you remove money from your retirement accounts, these dollars do not get a chance to grow at a compounded rate. As a result, you will end up with far less money at retirement age.

Putting college before retirement: It is natural that many parents want to help their children pay for their college educations. However, remember this: Your children can take advantage of student loans and grants to get through college. They then have their entire lives to pay back their college debt. If you spend your retirement dollars to help fund your children's education, though, you will face severe financial consequences once you stop working.

Not diversifying: The best way to save money for retirement is by creating a diversified portfolio of stocks, bonds, and other savings vehicles. This way, if one savings vehicle suffers -- the stock market crashes, for instance -- your other investments will remain strong. But, unfortunately, too many investors put all their dollars into one type of investment, either incurring too much risk or not enough.

Nearing Retirement Age

Underestimating medical expenses: Too many people think they will remain healthy throughout their retirement years. Unfortunately, that often doesn't happen, and not planning for medical expenses can prove a costly mistake. Fidelity estimated that most retirees should expect to pay roughly $315,000 in medical costs during their retirement years.

Underestimating their lifespans: We are living longer today. That is good news. However, it also means that you will want to save more money for retirement. Don't mistake thinking that your retirement will be a relatively short one. If you leave work at age 66, you might have 30 years of retirement living to fund.

Retiring too early: Full Social Security benefits kick in at age 66.The longer you put off retiring, though, the higher your annual benefits will be. If you can keep working, it makes financial sense to push off retirement as long as possible.

Retirement

Withdrawing too much too early: Once you retire, don't make the mistake of withdrawing too many dollars from your retirement savings too early. Instead, financial planners advise that retirees follow the 4 percent rule: Only withdraw 4 percent of your retirement savings each year.