Setting goals is easy; following through on them is more difficult. Many times, I’ve found that people set their sights too high, only to see themselves fall short of their goals. It’s not because they failed, entirely, to reach these goals; it’s because they didn’t break down their goals, and became overwhelmed. Smaller hills are easier to climb than very tall mountains. Therefore, break down your large mountainous dream into smaller, more attainable foothills. By doing this, you’ll be more apt to follow through on your goals and reach them. Another hint is to make sure that your larger goals are also realistic. While having $5 million set aside for retirement is a very nice idea, is that how much you really need? Or, do you need less, more like $1 million? Taking a realistic look at your goals and your needs will also help you achieve these goals.

There are other pitfalls of retirement planning, including starting late, investing too conservatively, and investing too little. While one of these is enough to stunt the growth of your retirement fund, a combination of all three will kill it. I’ve always followed the adage that it’s never too late to start. While that’s true, the later you start,  the more you will have to put away for retirement. That’s because you will be closer to retiring then, than if you had started earlier. It’s amazing how many people will come to me and tell me that they want to retire in 10 or 15 years, and yet, they have done next to nothing about investing money for their retirement. Sometimes it becomes an unpleasant fact that they will have to work longer than they want to simply because they don’t have the means necessary to retire.

However, there is the flip side to that. I’ve had many people in their 20s and early 30s, sometimes single people and sometimes couples, come in with retirement accounts that are already blossoming. For me, that’s a wonderful feeling, because I know that these people already have the discipline to save. I won’t have to try and inspire them to save. It’s also impressive because for most people in that age bracket, there are other things that consume their money, be it a new house, children, or student loans. It’s so easy to put off saving for tomorrow when there are bills due today. That’s why I advocate paying yourself first.

What I’m trying to say is don’t put off until tomorrow what you can do today. Start saving money for your retirement. Open an IRA and invest the maximum amount of $3000 per year. Open a Roth IRA so you can enjoy the tax-free income once you start to take money out. Do you find that you sometimes have extra money at the end of the month? Invest it, rather than spend it. You may not want to, you may not even like it, but you’ll find that it will benefit you more later than it will now.

Another problem is that many people are investing their money too conservatively, often in bank CDs or money market funds that are paying less than seven percent. With the uncertainty in the market, it’s understandable to want to be more cautious with your money. Certainly, I would never encourage anyone to speculate with their retirement money; it’s too important. However, investing too conservatively may hurt you just as much as being too risky. Wise people may decide to take a fair bit of risk with their money. They know that by investing too conservatively, their money isn’t going to keep up with inflation, thus, lowering the buying power of their money.

When you invest your money, you want it to be working as hard for you as you did for it, right? By socking it away in a CD or money market fund (or worse yet, a savings account), your money isn’t working very hard for you at all. It’s almost just sitting there, waiting for you to come get it. But, investing the money with a little bit more risk may result in your money working harder for you. Again, you just have to be realistic. To want to average 10 percent a year may not be unrealistic. To want 20 percent or more per year is unrealistic. Just invest your money according to how much risk you are comfortable taking, keeping in mind that not all years are rosy and your account may lose some value.

Then there is investing too little money, meaning too little overall, not in increments that are too little. Generally, there is no such thing as too little, unless you are hitting single-digit numbers. For instance, $5 per week is too little. That is only $260 per year But, if you can invest $50 per week ($2600 per year), that’s much better. The more money you can invest at one time, the better, because then all that money will be able to start working for you. But, truly, any amount is better than nothing.

Investing too little over the long term won’t help you too much. That’s why investing as much as you are comfortable with, and starting as early as you can, are so important. It’s so easy to procrastinate, but to do that will mean that you don’t value your retirement. You could be retired for 10, 20, or even 30 years of your life. Don’t you want to be able to enjoy it as much as possible?

These dangers become even greater when you consider the implications of compound earnings, which magnifies these mistakes. Compound interest  can  turn  a  small  investment  into  a  much  larger investment over time. That’s why it’s really important to invest your money early, as well as take some risk. Compound interest at 6 percent doesn’t sound too bad, but what if you could get compound interest at 10 percent? Sounds much better doesn’t it? Especially if you consider that increasing the interest rate by 4 percent could mean doubling or tripling your money. For example, the difference between investing $1 at 5 percent and investing $1 at 10 percent for 30 years is $13.13 ($17.449 _ $4.322).

This assumes that everyone can handle higher-risk investments, when the truth is that there are some people who cannot tolerate the risk involved with certain investments. If you find that you really can’t sleep at night because you are worried about your money, then you do need to have it invested more conservatively. However, your choice then becomes putting it in something like a bank CD (which is also insured up to $100,000 per investor) or a savings account. Obviously, since both investments are very low risk, you will need to put your money in the bank CD because it yields a higher interest rate than the savings account would. Also, since you will be utilizing lower-paying investments, you will need to invest more than you would otherwise. Therefore, if you were going to invest $1500 per year in higher-risk investments, you’ll need to invest more than that, say $3000, simply because the money is going into lower-paying investments.

All things considered, try to invest as much as possible in an investment vehicle that has the highest potential return that you are comfortable with. And, while it’s never too late to start, if you haven’t yet begun to save for your retirement, do it now! The earlier you begin, the more money you will be able to amass before you retire. You may also find that you’ll be able to retire sooner than you had anticipated.