Retirement authority Lynn O'Shaughnessy says people sabotage their retirement planning efforts by making expensive mistakes. According to O'Shaughnessy, workers often make the mistake of cashing out their 401(k) retirement plans when they switch jobs. After withdrawal penalties and federal and state taxes are added up, workers end up paying 40 to 50 percent in taxes, netting losses of thousands of dollars. Another way O'Shaughnessy says investors lose money without realizing it is by not tracking their investment costs closely enough. People can avoid this trap by scrutinizing the costs of their retirement fund investments. Other bad habits people should avoid include failing to diversify, loading up on company stocks, failing to double check statements for mistakes, and borrowing against their 401(k)s.