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

The start of a new year is always a great time to review your retirement plan. While it might not be the most exciting New Year's resolution, it could have the most impact. Every year, thousands of employees have access to 401(k) retirement savings accounts. However, many of them do not understand the benefits of their accounts or how to maximize them.

Many employees report that 401(k) paperwork is confusing and that it's hard to understand which funds to choose. However, asking questions to better understand your account and taking the time to make sure you aren't making the three main 401(k) mistakes below could mean the difference of $50,000 to $100,000 in additional retirement income.

Here are the three main mistakes people make, information on 401(k) contribution updates for 2026, and tips on how to maximize your retirement savings, even in the midst of increased living expenses.

Not getting your full employer match

According to the fourth annual Protected Retirement survey from the Nationwide Retirement Institute, 28% of employees over 45 expect to delay their retirement due to not having enough savings. That's why it's so important to take advantage of matched funds. Employers that match funds essentially give free money to employees. However, you may miss out on it if you don't invest enough.

To give an example, if your employer matches 50% of the first 4% you contribute to your retirement account, and you make $80,000 a year, you would miss out on $800 of free money if you only contributed 2% instead of 4%. It may not seem like much on a year-to-year basis, but it could be a tens of thousands of dollars difference over the course of your career by the time you reach retirement age.

Paying too much in fees

401(k) fees are pesky costs that are sometimes buried deep in your 401(k) paperwork. While these fees may seem small, they can compound and significantly impact your returns over time. For example, let's say you choose to invest in a fund that charges 0.10% in annual fees instead of another fund that charges 1% in annual fees.

If we calculate investment returns on a $100,000 starting investment with a conservative 7% return, the first fund would earn more than $150,000 over 30 years than the second, simply because it has lower fees.

Not increasing contributions over time

Many employees choose a contribution rate early in their career and never adjust it, even after getting annual raises. However, increasing contribution rates over time is one of the most straightforward ways to max out your retirement savings.

For example, if a young worker in their twenties starts a job earning $60,000 a year and contributes 5% to their 401(k), they will contribute $3,000 per year. However, if that worker never adjusts their contribution rate, they will miss out on the opportunity to maximize their investments. If, five years into their job, they get a raise to $90,000 a year and still contribute only 5%, they will invest $4,500 per year.

However, if they had increased their contribution slightly to 7%, they would invest $6,300 annually. This difference of $1,800 a year invested in their twenties at a conservative 7% return could mean missing out on six figures of returns at retirement, even if their salary never increased past $90,000.

New 2026 401(k) rules

The IRS is increasing employee contribution limits to $24,500 in 2026. However, the most significant change will apply to high-income workers over the age of 60.

Starting in 2026, people earning more than $145,000 per year must contribute catch-up payments to a Roth account instead of a traditional account. This will limit the amount of tax benefits these high earners will get in 2026.

Economic factors impacting contributions

Even though the contribution limits for 2026 have gone up, several economic factors might impact your ability to max out your retirement account. The most pressing issue is rising living costs.

According to the Bureau of Labor Statistics, grocery prices alone are up 2.7% in the last year. Additionally, energy prices, gas, dining out, and regular household expenses have all risen.

Check with your employer to see whether or not they've changed their employer match policies for 2026. Some employers have been negatively affected by tariffs and might adjust their 401(k) policies in the new year.

Ways to boost 401(k) contributions

Even though many factors will affect employees' ability to max out their retirement accounts, there are still ways to boost 401(k) contributions in 2026.

First and foremost, it's essential to have an emergency fund separate from your 401(k) with at least three to six months' expenses in it. The purpose of an emergency fund is to insulate you when the unexpected happens, such as a car or health issue. Having an emergency fund prevents people from making early withdrawals from their 401(k), which can cut into their long-term returns.

Another way to boost your 401(k) contributions is to start as early as possible. The earlier you start investing, the better. Doing this, plus avoiding the three mistakes mentioned above, can help you boost your 401(k) contributions in 2026 and beyond.

Reviewing your 401(k) plan details

Even though there are outside economic factors that could impact your ability to max out your 2026 retirement contributions, you can still find ways to maximize the money you can invest.

Reviewing your 401(k) plan details is a good first step at the beginning of the year. Look at your summary plan description (SPD), see whether you're earning the full employer match, and check your employer's vesting schedule. Some employers make employees fully vested right away, while others require you to work for a few years first.

Bottom line

If you want to invest in your 401(k) in 2026, it's a good idea to be aware of the common pitfalls mentioned above. Another helpful tip is to check whether your plan allows automatic escalation. That is when your plan automatically increases your contributions every year. Doing this can help you avoid investing too little and hopefully max out your 401(k) and retire comfortably.

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