10 regrets people have about their 401(k) choices

Most of us picked a 401(k) fund on day one and never looked back, only to realize later how expensive that autopilot can be.

Retirement planning often feels like that nagging chore you know you should do, like flossing or cleaning the gutters, but it is infinitely more expensive if you ignore it. Many of us sign the paperwork on our first day of work, pick a random fund, and then proceed to ignore the account for the next three decades until the grey hairs set in.

Unfortunately, looking back with perfect vision does not add zeroes to your bank account, and the realization of missed opportunities can be painful when you calculate how much money you left on the table. The good news is that learning from the missteps of others is the smartest way to future-proof your own golden years without having to learn the hard way.

Waiting Too Long To Start

The most common groan among retirees is simply that they dragged their feet before putting their first dollar away. Time is the most powerful ingredient in investing, often mattering more than the actual amount you save. When you delay starting by even five or ten years, you miss out on the early cycles of compound interest that do the heavy lifting for your portfolio.

This is not just a vague feeling of remorse; it is a measurable statistical trend among American workers. According to a Bankrate survey, 22% of Americans say that not starting to save for retirement early enough is their single biggest financial regret. Catching up is mathematically harder than starting small when you are young, so the best time to plant that tree was yesterday.

Leaving Free Money On The Table

Many companies offer a match on your contributions, which is essentially a salary bonus that goes directly into your investment account. Failing to contribute enough to get the full employer match is literally turning down free money. It is one of the few guaranteed returns you can get in the financial world, yet many people skip it because they want that cash in their checking account today.

You might think that 3% or 4% does not make a huge difference, but over a career, that match can grow into hundreds of thousands of dollars. If your employer offers to double your money up to a certain point, you should move heaven and earth to reach that threshold. Walking away from a match is a mistake that haunts people when they realize they voluntarily took a pay cut for years.

Cashing Out When Changing Jobs

When you leave a job, that balance in your 401(k) can look like a tempting pile of cash to pay off debt or fund a vacation. However, taking the money out early triggers a painful tax bill and a penalty that instantly shreds your hard-earned savings. You lose a chunk of your principal immediately, and you permanently kill the future growth that money would have earned.

This behavior is surprisingly common and acts as a massive leak in the retirement system. Data from Fidelity revealed that roughly 41% of workers typically cash out their 401(k) accounts when they switch jobs rather than rolling them over. This “leakage” destroys momentum, forcing you to essentially restart your retirement progress from scratch at your new gig.

Playing It Too Safe With Cash

There is an instinct to protect your money, especially when the stock market starts acting like a rollercoaster. But keeping your retirement savings in cash or low-yield bonds for too long exposes you to the silent killer known as inflation. If your money is not growing faster than the cost of living, you are actually losing purchasing power every single year.

The fear of market volatility often blinds savers to the much bigger risk of outliving their money. In the Natixis Global Retirement Index, 83% of investors admitted that recent economic shifts reminded them just how big a threat inflation poses to their security. You have to accept some short-term bumps in the road to achieve the long-term growth needed to buy groceries in 2050.

Ignoring The Fees You Pay

Most people have no idea what they are paying for the privilege of investing their own money. High expense ratios and administrative fees can eat away a massive portion of your returns over the course of a lifetime. You might not notice a 1% or 2% fee in a single year, but over thirty years, that friction can cost you six figures in lost value.

You should treat your investment fees with the same scrutiny you apply to your cable bill or mortgage rate. Taking a closer look at the fine print and swapping high-cost funds for cheaper index funds is one of the easiest wins you can get. Ignorance is definitely not bliss here; it is just an expensive donation to a financial institution.

Borrowing Against Your Future Self

Treating your 401(k) like a piggy bank for current expenses is a trap that many fall into during a cash crunch. Taking a loan from your retirement account might seem like a low-interest solution, but it removes your money from the market right when it needs to be growing. If you lose your job while the loan is outstanding, you might be forced to pay it all back immediately or face taxes.

The opportunity cost of that missing money is often far higher than the interest you think you are saving. Every dollar you pull out is a soldier you have removed from the battlefield of compound growth. Regret sets in when you realize that the “emergency” kitchen remodel cost you a significantly more comfortable retirement.

Underestimating The Magic Number

For a long time, becoming a millionaire was the gold standard for retirement, but inflation has moved the goalposts. Many people realize too late that their savings target was based on yesterday’s prices, not what life will cost in twenty years. Without a realistic goal, you might arrive at retirement only to find your nest egg is more of a frantic scramble.

The gap between what people have and what they need is widening alarmingly. CNBC says that while Americans believe they need $1.26 million to retire comfortably, the average 401k balance is $131,700 saved. This disconnect creates a rude awakening when the paycheck stops, but the bills keep coming.

Panicking During Market Dips

Human nature drives us to run for the exit when things get scary, but in investing, that is the wrong move. Selling your investments when the market drops locks in your losses and guarantees you will miss the recovery. The people who end up with the biggest regrets are the ones who turned a temporary paper loss into a permanent real loss.

Trying to time the market is a fool’s errand that professionals fail at constantly. Successful savers understand that volatility is the price of admission for higher returns, and they simply ride out the storm. Staying the course during a recession is psychologically difficult, but it is the only way to catch the rebound.

Forgetting To Increase Contributions

Setting up your contribution rate once and never touching it again is a recipe for mediocrity. As you get raises and promotions, your lifestyle costs tend to creep up, and your savings rate needs to climb alongside them. If you are still saving the same $200 a month that you were ten years ago, you are falling behind.

The actual balances for many Americans show that we are not being aggressive enough. SmartAsset says Vanguard’s “How America Saves 2025” report showed that the median participant account balance was just $38,176 in 2024. To avoid being average, you need to make it a habit to bump up your percentage every single time your salary goes up.

Relying Blindly On Target Date Funds

Target date funds are a great default option, but they are not a magic wand that solves every problem. Some people regret not checking if the fund’s “glide path” actually matches their personal risk tolerance or retirement timing. You might find that the fund becomes conservative too early for your liking, or stays too aggressive when you want safety.

These funds are designed for the average person, but your life might not be average. It is smart to look under the hood occasionally to make sure the asset mix still aligns with your specific goals. Treating your financial future with a “set it and forget it” attitude works until you realize the machine was heading a slightly different direction than you were.

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