Retirement Retirement Planning

This One 401(k) Mistake Could Cost You $30,000, Are You Making It?

Small 401(k) mistakes can lead to major investment losses.

By Catherine Collins

Edited by Andrea Basse

Updated Jan. 5, 2026

When you think about losing money in your 401(k) retirement plan, you might think it happens from a big market crash, losing your job, or needing to take money out for an emergency. However, some minor mistakes can cost you $30,000 or more in 401(k) returns by the time you retire.

Luckily, these small mistakes are easily rectified once you're aware of them. Here are several common 401(k) mistakes to avoid so you can keep more of your hard-earned money when it's time to stop working.

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Failing to understand your employer's match

If your employer offers a match, it's important to read the fine print. Every employer is different in terms of whether they provide a match, the type of match they offer, and whether the matched funds are immediately vested or vested over time.

Whether you're getting a new job soon or have been at your job for years, take the time to read through your 401(k) paperwork. This paperwork should detail your employer's matching policy. If you're not contributing enough money to get your full employer match, you're leaving money on the table. That's money that could translate to a $30,000 or more loss by the time you're ready to retire.

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Forgetting to invest your cash

Leaving 401(k) contributions in cash is a very avoidable, but sadly common, mistake. To invest your 401(k) money, you have to do it in two steps. The first step is to move cash into your account, and the next step is to use that cash to purchase funds. Usually, employees set this up to happen automatically. However, many don't. So, make sure you have this two-step system fully set up for your 401(k). Otherwise, you could be leaving tens of thousands of dollars on the table.

Missing the catch-up contribution opportunity

Once you turn 50 years old, the IRS allows you to invest extra money into your 401(k) each year. Once you turn 60, you can add even more. This provides a rare opportunity to top up your investment accounts before you reach retirement age. Not using these catch-up contributions means that you miss out on the chance to get tax advantages, extra investment growth, and more money to live off of during your retirement years.

Paying too much in fees

It's very easy to overlook 401(k) fees. After all, you won't get a bill for your investment account fees. Instead, these fees are often buried or hidden beneath piles of paperwork. It can be hard to know exactly how much you're paying in investment fees unless you go and look. Some investments have very low fees, such as a 0.1% expense ratio, while others might have a 1% expense ratio. Although the difference seems small, these fees cut into your investment returns, which can translate to $30,000 or more in fees over the course of your career.

Getting a 401(k) loan

While it might seem like a good idea to get a 401(k) loan because you're essentially borrowing money from yourself, the issue is that when you take money out of your 401(k), that money is not able to compound and grow. Even if you only have a 401(k) loan for a short period, that missed time in the market could translate into $30,000 or more missing from your final retirement account, especially if you plan to retire in 20 to 30 years.

Not increasing your contribution rate

People often choose their 401(k) contribution rate when they start working. However, not revisiting or adjusting this contribution rate is one mistake that can lead to future investment losses. So, every year, make sure to increase your contribution rate percentage. If you get a raise, increase your contribution percentage again. If you make it a habit of regularly increasing your contribution rate every time you get a raise, that can help you to eventually max out your retirement account annually.

Where to get 401(k) help

If you need help or have questions about your 401(k), the first place to go is your human resources department. Your HR department should have details about your 401(k) plan, the types of funds available, and information on your company's retirement plan policies. If you need tax planning advice, getting the help of a financial planner can make sure you're prepared for retirement and have enough to live off of when it's time to stop working.

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Bottom line

Small mistakes like the ones listed above can lead to a $30,000 or more shortfall in your retirement accounts. These mistakes are rarely intentional. They usually come from very small oversights or from employees who are busy and haven't taken the time to look at the details of their 401(k) accounts. Fortunately, a few minor tweaks will fix some of the mistakes above and help you maximize your investment returns so you can retire comfortably in the future.

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