Three costly pitfalls that could derail your 401(k) earnings

When it comes to retirement savings, the 401(k) is the primary source of future income for many people. With so much on the line, there’s little room for error.

It goes without saying that you should save all you can and be sure to take full advantage of any match your employer offers. But also avoid costly pitfalls.

Pay attention to fees: Understand that each investment option in your 401(k) carries a different expense ratio and there can be administrative and investment fees and service charges. Over time, fees take a big bite out of your savings growth. Even high-fee 401(k) plans often offer a couple of investment options with lower expense ratios, such as index funds.

“Savvy employees can lower their 401(k) fees by choosing index funds if they're offered, as opposed to the higher-fee mutual funds that constitute the bulk of the selection,” says Roger Lee, CEO of Human Interest, a San Francisco-based online 401(k) provider.

Consider it untouchable: Sometimes you might face a "cash crunch" or emergency, but do your best to let the funds in your 401(k) stay in and grow. “When you take money out early, you lose the eighth wonder of the world, as per Albert Einstein — compounding,” says Brian Cohen, an investment adviser with Landmark Wealth Management in Melville.

Don’t show your employer too much love: You don’t want a portfolio full of your company’s stock. “You’re already exposed to your company through your paycheck and stock rewards/bonuses,” says Michael Tanney, co-founder of Wanderlust Wealth Management in Manhattan.

CORRECTION: An earlier version of this story listed Human Interest's headquarters location incorrectly.