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3 Ways You Could be Sabotaging Your Retirement

We all like to think that retirement is going to be a comfortable time of doing exactly what we want to do. While this is an achievable dream, things you do today will make a big difference in your ability to retire comfortably in the future.

You could be sabotaging your retirement without really thinking about it. Here are three ways you might be doing yourself a disservice when it comes to retirement:

1. Not earning to your potential. One of the basic truths of retirement planning is this: The more money you put in, the more money you end up with. If you want to put more money in, you need to make sure that you are earning more money. Are you earning to your potential? Some of the mistakes that you might be making include:

--Failure to negotiate a higher salary. When you start at a new job, understand your worth, and do your best to negotiate a higher salary. Even if you don't get the exact number you want, you can probably get a little bit of a bump at hiring if you negotiate.

--Not asking for a pay raise. While you can't always be nagging your boss for a higher salary, you can ask at times when it makes sense. If you are being given more responsibility, or if you have provided solid value to the company, ask for a pay raise or a promotion.

--Lack of a side income. Instead of wasting your life away in front of the TV, consider a small side gig a few hours a week that can help you earn extra money while you do something you enjoy.

Once you boost your earnings, put the extra into your retirement account. Thanks to the magic of compound interest, it will grow at a better rate, and result in a bigger nest egg when you are ready to retire.

2. Paying interest to other people. When you are in debt, the interest payments you make don't help you. They only serve to enrich someone else. Instead of directing your resources to building a successful retirement, your interest payments are going right into someone else's pocket. You'll sabotage your retirement the longer you are in debt.

Make a plan to pay off your debt as quickly as possible. Start with the highest interest debts and work your way down. Try to be done with your mortgage by the time you retire (earlier if possible). Mortgage debt is still debt, and that's an obligation that can hold you back during retirement. Get rid of your debt, and you'll keep more of your money, and be able to use it to build your financial future.

3. Taking money out of your retirement account. One of the worst ways to sabotage your retirement is to take money out of your account. You are supposed to be building a nest egg, not depleting it. When you take money out of your retirement account, you can become subject to taxes and penalties. Some accounts, like the Roth IRA, won't charge penalties when you withdraw contributions, but it's still not a great idea.

Even if you borrow from your retirement account, and pay yourself interest as you repay the money, it can reduce your ability to live comfortably in retirement. Many people forget about the opportunity cost involved when you take money out of your account. If that money isn't growing in your account, you are robbing yourself of your most valuable investing weapon: time. You can't replace the time that your money was out of the account, and not working on your behalf.

The financial choices you make now can have a dramatic impact on your retirement security. Try to avoid sabotaging your future.

FMF writes at Free Money Finance, a personal finance site that helps readers grow their net worths. He shares practical tips that have helped him accumulate a significant net worth and can do the same for others, including making extra income using the best cash back credit cards and investing wisely in index funds.