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Even careful, dedicated savers don’t always have a strategy in place to meet financial needs during retirement. Maybe you’re simply putting money aside and hoping it will work out.

People often make the same mistakes with their retirement plans. The good news is these pitfalls are easily avoidable if you know to look for them.

Here are five things every retirement saver should watch out for.

1. Withdrawing funds early.

When planning a home improvement project, a grand vacation or how to pay for a child’s college tuition, you may be tempted to tap your retirement account.

Taking money from a tax-advantaged retirement account like an IRA or 401(k) before retirement age can be expensive. Funds withdrawn from these accounts are subject to ordinary income tax rates, and they are also assessed a 10 percent tax penalty if taken before age 59½. Then there are the lost investment earnings to consider.

Say you take $20,000 from your 401(k) to pay for an emergency expense. You’ll actually net just $13,000 after taxes and penalties (assuming you’re in a 25 percent tax bracket). But if you leave that $20,000 in your retirement account, and it grows at a rate of 6 percent per year, in 25 years it will be worth over $85,000.

That’s why it’s a good idea to build an emergency fund with about 6 to 12 months’ worth of expenses, even if it means a short hiatus from your retirement savings strategy. By building this financial buffer first, you will be able to avoid the pricey temptation of tapping your retirement accounts when life veers off course—and keep your long-term savings strategy on track.

2. Borrowing from a 401(k).

Workers today stay at a job for an average of just under five years, according to the most recent data available from the Bureau of Labor Statistics. This trend makes a 401(k) loan tricky for many employees.

Employees are required to pay themselves back and re-fund their 401(k) plans. Unfortunately, if you leave your job, the balance can’t be rolled over or moved to a new employer until the loan is repaid.

Most loans need to be repaid within five years—and sometimes sooner, or the outstanding balance will be treated as a pre-retirement withdrawal and will be subject to ordinary income tax and the early withdrawal penalty. Plus, the stock market grows more often than it contracts. Borrowers who pull money out of a retirement account are likely to miss out on potential market increases.

3. Assuming Automatic Enrollment Is Enough.

More people are likely to participate in a retirement plan, such as a 401(k), that has an automatic enrollment provision, according to a report by Towers Watson, a human resources and risk management consultancy. Even so, there’s a downside. According to the report, employees who sign up via auto enrollment also tend to contribute less than those who enroll in 401(k) plans on their own.

Why? Because the average default contribution level set by most employers is only 2.8 percent, according to the Bureau of Labor Statistics. According to the Center for Retirement Research at Boston College, the average worker should be saving around 14 percent of his or her annual income, often more.

4. Forgetting to Rebalance

The proportion of your retirement savings you invest in different asset classes—like stocks or bonds—is a personal decision, usually based on factors like how close you are to retirement and how much risk you can tolerate.

But when the stock market performs well, riskier equity assets grow and take up a larger proportion of your investment portfolio. If you don’t rebalance (sell some of those inflated assets and replace them with lower-risk bonds to bring your portfolio back in line with your plan), you could find yourself taking on more investment risk than you’re comfortable with.Advice for investors is to rebalance their accounts every quarter, regardless of market conditions, and then again when the stock market rises or falls by 5 percent or more.

Please remember no investment strategy can guarantee a profit or protect against a loss in a down market.

5. Not Diversifying Your Retirement Assets

A comprehensive retirement plan is more than just a 401(k). In order to take advantage of up markets while protecting yourself during down markets, you should put your money in a variety of vehicles, including IRAs or 401(k)s, Roth accounts, investments, deferred annuities and life insurance.

Although no investment strategy can guarantee a profit or protect against a loss in a down market, spreading your money like this accomplishes two goals. First, it allows you to benefit when the market is up while shielding you from downturns. Second, in retirement you can maximize your income by pulling money from your accounts in the most tax-efficient way possible.

In the end, that’s what’s most important: building and shielding enough cash to retire happily. Avoid these five common mistakes, and you’ll be well on your way.

Northwestern Mutual does not offer tax advice; please see your tax advisor for that service.

Written by Alaina Tweddale. Originally published as part of Northwestern MutualVoice on