3 Mistakes All 401(k) Savers Should Avoid in 2026

If you're contributing to a 401(k), you're already doing your part to set yourself up for a financially stable retirement. And that's something to be proud of.

Many people kick off retirement without personal savings and wind up having to live on Social Security alone. But living on just those benefits could mean having to cut a lot of corners, so you're better off building yourself a retirement nest egg if you can.

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But if you're going to save in a 401(k) plan, you don't want to let silly mistakes ruin your efforts. Here are three big mistakes you should take care to avoid in 2026.

1. Not claiming your full workplace match

If someone were to walk over to you on the street and offer you $50 with the caveat that you need to already have $50 in your wallet, you'd probably consider it a good deal, right? Well, 401(k) matches work similarly.

A 401(k) match is free money your employer will give you simply for making contributions. But if you're passing up that match, you're denying yourself easy money that could go a long way for your senior years over time.

Let's say your employer will give you $3,000 in 401(k) matching dollars this year, but you only contribute $2,000. That means you're saying no to $1,000. But that's not all.

If you're years away from retirement, that $1,000 has time to grow. If you pass it up, you won't get that benefit.

And for context, $1,000 invested today at an 8% yearly return, which is a bit below the stock market's average, could be worth almost $22,000 in 40 years from now. So do your best to claim your workplace match in full -- even if it means having to reduce some spending or even work a second job to drum up the money.

2. Not paying attention to investment fees

One nice thing about IRAs is that they allow you to hold individual stocks in your retirement account. With a 401(k), you're generally limited to different fund choices. But some of those funds might come with costly fees that eat away at your investment returns over time.

Target date funds are notorious for charging high fees, for example. And for many 401(k)s, they're the default investment option -- meaning, if you don't choose funds of your own, your money might land in a target date fund.

It pays to see what index funds your 401(k) offers. Those tend to be passively managed and come with lower fees.

3. Not considering a Roth savings option

Many 401(k) plans these days offer both a traditional savings option as well as a Roth. With a Roth 401(k), you won't get an immediate tax break on your contributions. But you'll get the benefit of tax-free investment gains in your account, as well as tax-free withdrawals.

The latter could be huge, because remember, we don't know what tax rates will look like 10, 20 or 30 years from now. If you make your 401(k) contributions Roth-style, you're at least locking in today's tax rate on that money.

Plus, Roth 401(k)s don't force you to take required minimum distributions (RMDs) like traditional retirement plans do. RMDs aren't always a problem, but they can be if you don't need the money right away. So all told, a Roth 401(k) gives you more flexibility.

Incidentally, if you earned more than $145,000 this year and are looking to make a catch-up contribution to your 401(k) in 2026, your only option for that catch-up will be a Roth. However, you can make your regular contribution on a pre-tax basis in a traditional 401(k).

Your 401(k) could be your ticket to a rewarding retirement. Just make sure to avoid these mistakes so you don't accidentally derail your savings efforts.

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