Retirement Retirement Planning

10 Costly 401(k) Mistakes People Make in Their 50s (And the Price They Pay)

These are the most common 401(k) mistakes and how to avoid them.

By Catherine Collins

Edited by Amanda Machado

Updated Dec. 30, 2025

If you're in your 50s, it's important to make the right money moves when it comes to your 401(k) retirement savings. You are likely earning more than you ever have in your career, have children who are growing up, and you may even be thinking about your retirement years that are just around the corner.

However, making some common 401(k) mistakes can delay retirement and cost you tens of thousands of dollars in lost returns. Here are 10 of them you should know about so you can make sure to avoid them.

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Becoming too conservative too quickly

Many financial advisors suggest that investors shift toward more conservative investments as they approach retirement. However, some people in their 50s change their investments to be too conservative too quickly.

Many people in their 50s still plan to work another decade, and you don't want to miss out on potential growth. Speak with a financial advisor to make sure you have the right allocation for someone your age. They'll help you find a way to manage investment risk in a way that's appropriate for your retirement goals.

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Never increasing your contributions

Sometimes people set up their 401(k)s early in their careers and never update or adjust their contributions. Your 50s are often your peak earning years. You're likely seeing the benefits of decades of experience, and hopefully, you don't have daycare costs anymore. Use these years to your advantage by increasing your contributions as much as possible.

Wasting raises and bonuses

Ideally, with every raise and every bonus, increase your contribution percentage even more before going out and wasting the money shopping for things you don't need. Even small percentage increases now can positively impact your 401(k) balance when it comes time to retire.

Not using catch-up contributions

Speaking of contributions, not taking advantage of catch-up contributions once you turn 50 is a big mistake. Catch-up contributions give people in their 50s and 60s an opportunity to substantially increase the amount of money in their retirement accounts.

Not staying up to date with 401(k) changes

In 2026, people in their 50s can invest an extra $8,000 every year on top of the increased $24,500 amount contributions. Make sure to stay up to date with new laws, so you know whether or not you can contribute more each year.

Taking 401(k) loans

According to a Transamerica Retirement Survey, 21% of surveyed workers took an early or hardship withdrawal from their 401(k). Even though many people consider 401(k) loans less risky because you're borrowing money from yourself, it's still money that you are taking out of the market that could be working hard for you with compound interest.

Plus, if you get unexpectedly laid off or have to change jobs quickly, the entire balance of your loan will be due, which could lead to early withdrawal penalties if you can't pay it back.

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Not considering 401(k) fees

401(k)s can come with significant fees that are hidden and hard to figure out. There are expense ratios to consider, administrative fees, and managed account costs. Without realizing it, these fees can cut into your investment returns and, by the end of your career, add up to tens of thousands of dollars.

As a next step, check that you are invested in low-cost funds with low expense ratios to optimize your account for maximum profits.

Holding too much employer stock

Employer stock is a unique perk that some companies offer. However, having too much invested in an employer's stock can be detrimental, especially if you work for a smaller company with a short track record. If your employer starts struggling or the business declares bankruptcy, you could lose your investments, which would be detrimental to someone in their 50s looking to retire soon.

Investing only in your 401(k)

Your 401(k) is just one retirement vehicle. Ideally, you will diversify by having several different types of investments and assets as you head into retirement. For example, you could have a Roth IRA, an HSA, real estate, and more in addition to a 401(k). Ultimately, 401(k)s are meant to be a way to save for retirement and to get tax advantages along the way. It was never meant to be the only retirement account you have.

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Not having a retirement plan

Many people don't make a concrete retirement plan. Instead, they contribute to a 401(k) without considering how much they will need to retire and whether they'll have enough to live on once they stop working. It's very important to have a clear idea of your expenses, health care costs, how much you'll receive from Social Security, and your goals for your retirement years.

Bottom line

Being in your 50s means that you are one step closer to retirement. However, it also means that if you make 401(k) mistakes now, you have less time to bounce back.

Fortunately, many of the mistakes mentioned above are avoidable by seeking help when you need it, managing your cash flow to increase your contributions, and planning for your future to retire comfortably. Now is the perfect time to review your investment portfolio, adjust your 401(k) asset allocations, and review your account fees to make sure your 401(k) is optimized for maximum profit.

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