If you’re worried about retirement — well, you should be. When it comes to saving, virtually the entire country is falling short. In fact, according to CNBC, most Americans close to retirement age have saved only 12 percent of what they need.

While a 401(k) is a smart way to save, you still need to make sure you’re getting the best returns for your hard-earned contributions. Here are a few common 401(k) mistakes to avoid.

Failing to contribute

Finances can be complicated, but it’s not rocket science: If you don’t contribute, you’re not going to build your retirement. While it sounds simple, the scary truth is that two-thirds of Americans aren’t contributing to a 401(k), according to Bloomberg.

Unfortunately, many employers do not offer 401(k) plans, but even more unfortunate is that the millions of Americans who have access to a plan are not contributing. If your employer offers a 401(k) account, contribute! If it doesn’t, open an IRA, which also allows you to save pretax dollars for retirement.

Failing to contribute enough to get the full employer match

You wouldn’t walk away from free money, would you? But that’s exactly what many people do with their 401(k). If you’re lucky enough to have an employer that offers a 401(k) and a match schedule, you’d be silly not to take full advantage.

According to CNN Money, however, 1 in 5 participants in a 401(k) aren’t contributing enough to get their full employer match. Find out what your employer matches and contribute at least that much. For example, some employers will match your yearly contributions up to 3 percent of your income. If you’re only contributing 2 percent per month, you’re saying no to free money (and who does that?).

Not understanding the investment options

Making regular contributions to your 401(k) can be a sacrifice. That’s why it’s imperative you ensure your savings are working hard for you. Chances are, your employer’s 401(k) plan sends your contributions to a default fund — which may or may not be your most lucrative option.

As a 401(k) participant, you can decide where you want your contributions invested. According to Kiplinger, half of participants who have contributed for more than two years stillhave not moved their investments from their default fund, which is typically a money market option providing a negligible return.

While default funds are designed to “do no harm,” they certainly will not produce above-market returns (and may, in fact, produce below market). Not sure where to invest? A good wealth-planning advisor can help.

Taking early withdrawals

When you’re nowhere close to retirement, that big sum of money sitting in your 401(k) can seem awfully tempting. After all, you have lots of time to pay it back, right? Probably not.

Taking early withdrawals from your retirement account is a poor decision for a couple of reasons. First, you’ll be hit with huge penalties, turning your savings into a fractional cash sum. Second, any money you take out now will stop generating returns, giving you less to live on later.

If you’re switching jobs, don’t consider that a reason to cash out. You’ll still get hit with penalties and taxes. Instead, roll your 401(k) into your new employer's plan or into an IRA.

Taking a loan

Some employers allow you to borrow against your 401(k) funds. While that sounds much more attractive than cashing out, it still may not be a good idea. For example, if you borrow $30,000 from your 401(k) then get laid off, whatever you owe on that loan will come straight out of your retirement account — with all the penalties and taxes that come with it. Not to mention that by removing funds from your account — even temporarily — you miss out on the growth that it could potentially generate.

Saving money for retirement is already a challenge even if you make all the right choices. If you want help figuring out how to make sure you have enough money when that day arrives, contact an experienced investment advisor.

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