Don't Make This 401(k) Mistake in 2026

Core Insights - Regular contributions to a 401(k) plan are essential for retirement savings, as Social Security only replaces about 40% of pre-retirement income for average wage earners [1][2] - Simply funding a 401(k) is not sufficient; it is crucial to ensure that the investments within the plan are appropriate and effective [2][7] Investment Choices - Many employees default to target date funds in their 401(k), which adjust risk based on age but often invest too conservatively, potentially leading to lower returns [3][4] - Target date funds typically come with high fees that can diminish overall returns over time [4] - It is advisable to review the investment options available in a 401(k) plan, as there may be lower-cost index funds that provide better exposure to established companies [5][7] - While investing heavily in an S&P 500 index fund may not be ideal close to retirement, individuals can adjust their asset allocation as they approach retirement without relying on target date funds [6]