3 Retirement Planning Mistakes You Probably Don't Even Realize You're Making

It's no secret that many workers are unprepared for retirement. In fact, only 56% of Americans say they're currently saving for retirement, according to the Employee Benefit Research Institute's 2017 Retirement Confidence Survey.

Even if you do have a retirement plan in place, there are so many factors to consider. How much do you need to save? At what age do you plan to leave your job? When should you start claiming Social Security?

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When you're focused on the big picture, it can be difficult to think about the smaller factors that will also impact your retirement. You may be making a few simple mistakes and not even realize it until it's too late.

1. Forgetting to update your 401(k) contributions

If you're already contributing part of each paycheck to your 401(k), give yourself a pat on the back. But it's not enough to choose a static amount to contribute each pay period and stick with it forever.

To make the most of your 401(k) contributions, it's important to update the amount you contribute based on any financial changes in your life. For example, if you get a raise or accept a new job with a higher salary, you should be raising your contribution.

Some employers will allow you to contribute a fixed percentage of your wages, so when you get a raise, you automatically start contributing more to your 401(k). That can make it easier to contribute more, but that doesn't mean you shouldn't update your contributions when you can (for example, if you're earning income from a side hustle or if you get a bonus at work). Most financial experts recommend aiming for 10% to 15% of your wages. That may not be feasible for everyone, but at the least, you should be contributing enough to earn the full employer match (if your company offers matching 401(k) contributions).

For example, say right now you're 40 years old with $100,000 in savings, and you're currently contributing $100 per month to your retirement fund. Let's also say that at age 45, you start contributing $150 per month, and at 50, you're saving $175 each month until you turn 65. Assuming you're earning a 7% rate of return on your investments, here's what your total savings would look like if you adjust your contribution amount, compared to if you continued saving $100 per month until age 65:

Source: author calculations.

So while an extra $75 per month over 10 years may not seem like it would make much of a difference, it would amount to nearly $40,000 in total savings by the time you retired. And if your employer offers matching 401(k) contributions, any additional money you save will have an even greater impact. In this example, say you're getting a 100% employer match, doubling your contributions each month. If you're contributing $100 per month and receiving another $100 from your employer, you'll have a total of $700,237 by the time you turn 65. If you increase your contributions to $175 per month (bringing your total contributions to $350 per month), you'll end up with $818,359.

2. Relying too much on retirement calculators

Retirement calculators can be helpful in giving you a general overview of how much you need to save, but it's not enough to simply plug all your information into a calculator and wait for it to spit out the magic number you need to have saved by the time you retire.

Every retirement calculator is different, and they may give you wildly different results, even when you use the same inputs. For instance, when I plug my own information into the Motley Fool's retirement calculator, I'm told I'll need an estimated $1,018,401 saved for retirement. According to Merrill Edge's calculator, I'll need $1,300,242. And using AARP's retirement calculator, that number is $729,802.

None of these calculators are necessarily right or wrong -- they just use different methods of producing your retirement number. For example, both AARP's and the Fool's calculators allow you to include information about Social Security in the calculations, but Merrill Edge doesn't. And Merrill Edge asks about your comfort with risk when investing, but the other two don't take that information into consideration.

This isn't to say that you shouldn't use retirement calculators at all. If you're feeling overwhelmed by retirement planning and aren't sure where to start, they're a great tool. Just be sure to use multiple calculators to give yourself a range of numbers to consider, rather than completely trusting one calculator to give you the right answer.

It may be worthwhile to talk to a financial advisor as well. Calculators are great at crunching numbers, but they're not so good with all the human stuff. Advisors can talk with you about other factors that will impact your savings, like whether you foresee any health problems that could be costly, or if you plan to move to a new city with a dramatically different cost of living. You can never overprepare for retirement, so it's smart to use all the resources you have to get the best estimate of how much you'll need to save.

3. Forgetting to take taxes into consideration

Unless you have a Roth IRA or Roth 401(k), you're going to owe income taxes on the money you withdraw once you retire. If you're not planning for these expenses, it could cause some sticker shock when the time comes to pay your taxes.

The first step in preparing for taxes is to understand which types of income are subject to them in the first place. Income from Social Security typically isn't taxed unless you have other sources of taxable income (for example, a pension, annuity, income from rental properties, or tax-deferred retirement accounts), in which case you may need to pay taxes on a portion (up to 85%) of your Social Security income.

For other forms of retirement income -- namely, income from a traditional IRA or 401(k) -- you'll need to pay income tax on your withdrawals. The amount you'll pay will depend on how much you withdraw, your deductions, and your tax bracket, so it could fluctuate year to year. However, it likely won't be drastically different from what you pay now in taxes (unless your income is wildly different during retirement). It's just important to remember that taxes will follow you into retirement even though you're no longer working, so you may need to have a little extra saved to cover that expense.

When you're planning for retirement, it may seem like there are a thousand things you need to consider. It's easy to feel overwhelmed by it all, but by taking it one step at a time and avoiding some of the most common retirement planning mistakes, you can get on track for the retirement of your dreams.