You picked a percentage during your first week and have not touched it since. That is not a personal failing — nobody teaches this. Twenty minutes of reading fixes most of it.
This one is for employees, not owners.
Most people I meet enrolled in their 401(k) during their first week on the job, picked a contribution percentage in about ninety seconds, and haven’t touched it since. That was maybe five years ago. The money’s been going somewhere and they’re not entirely sure where.
That’s not a knock on anybody. Nobody teaches this. You got a packet and a login and a lot of words like “vesting” and “qualified default investment alternative,” and you had a job to start. So here’s the version I’d give you if we sat down for twenty minutes.
This is the first thing to check and it takes two minutes.
Find out what your employer’s matching formula is. A common one is 100% of the first 3% you put in and 50% of the next 2%. Under that formula, if you contribute 5% of your pay, the company puts in 4%. If you contribute 3%, the company puts in 3% and you just gave up the other 1%.
If you’re contributing below the level that captures the full match, you’re turning down money that’s already budgeted for you. It’s the only guaranteed return in the whole system. Whatever else you do, get to that number.
One wrinkle worth knowing: many plans match per pay period rather than annually. If you front-load your contributions and hit the annual limit in September, a plan without a true-up provision simply stops matching for the rest of the year. Spreading contributions evenly across all your paychecks avoids that.
Log in and look at where your balance actually sits. A lot of people find one of two things.
The first is that everything is in a money market or stable value fund. This usually happens when someone enrolled before automatic default rules were common, or actively chose it because it sounded safe. If you’re decades from retirement, that’s not safety, it’s a slow loss to inflation. Safe from market swings, but not safe from the fact that prices go up over 30 years and your balance barely does.
The second is a pile of funds picked semi-randomly from the menu. Six funds that all own more or less the same large US companies isn’t diversification, it’s the same bet made six times.
If you don’t want to think about it, most plans offer a target date fund with a year in the name — 2050, 2055, whatever’s closest to when you’d retire. One fund, professionally allocated, gets more conservative as the date approaches. It’s not exotic and it’s not perfect, but for someone who isn’t going to actively manage anything, it’s a reasonable default that beats both of the situations above.
Most plans now offer both. The difference is when you pay tax.
Traditional means the contribution comes out before tax, so it lowers your taxable income this year, and you pay tax on everything when you take it out in retirement. Roth means you pay tax on it now and it comes out tax-free later, growth included.
The rough rule: if your tax rate is likely higher later than it is now, Roth wins. If it’s likely lower later, traditional wins. In practice, someone early in their career at a modest income is often a good candidate for Roth, because their rate now is about as low as it’ll ever be and they have decades of tax-free growth ahead. Someone in their peak earning years with a high income usually gets more value from the traditional deduction.
A lot of people split it and do some of each, which isn’t a cop-out. Having both kinds of money gives you flexibility in retirement to control what your taxable income looks like in any given year.
Every plan is a little different, but here’s what’s worth asking about.
Automatic escalation. Some plans let you set your contribution to increase by 1% a year automatically. You’ll never feel a 1% raise-year bump, and in six years you’re saving substantially more without ever making the decision again. If your plan has it, turn it on.
Catch-up contributions. Starting the year you turn 50, you can put in an extra $8,000 on top of the regular limit in 2026. And if you turn 60, 61, 62, or 63 during the year, that jumps to $11,250 — though it replaces the $8,000 rather than adding to it, and not every plan offers it. Very few people in that window know it exists.
Your old 401(k) from your last job. If you’ve changed jobs and left an account behind, it’s still yours. Generally you can leave it, roll it into your current plan, or roll it to an IRA — each has tradeoffs around investment options, fees, and creditor protection, so it’s worth talking through rather than defaulting. What you shouldn’t do is cash it out. That’s income tax plus a 10% penalty under 59½, and it’s the single most expensive mistake I see people make between jobs.
Vesting. Your own contributions are always 100% yours. Employer money often vests on a schedule. If you’re thinking about leaving a job, knowing your vesting date can be worth thousands of dollars and a few weeks of patience.
Loans and hardship withdrawals. Most plans allow them. Sometimes a loan is the right call. But you’re repaying with after-tax dollars, the money is out of the market while it’s out, and if you leave the job the balance often comes due fast. Understand it before you need it.
The biggest thing I do for people isn’t picking funds. It’s helping them get organized.
Most people have pieces scattered everywhere. A 401(k) here, an old one there, an IRA from a rollover in 2016, a savings account, a car loan, some credit card debt, maybe a pension from an early job they’ve half forgotten. Each piece might be fine. But nobody has ever put it on one page and asked whether the whole thing points anywhere.
When we do that, the conversation changes. It’s not “which fund should I pick,” it’s “you’re 44, here’s everything you have, here’s what it becomes at 65, here’s the gap, and here are the three things that close it.” That’s a different feeling than logging in and staring at a percentage.
And a lot of the time the answer isn’t complicated. Raise your deferral two points. Fix the fund you’re sitting in. Roll the old account so you can actually see it. Get the emergency fund up so you stop borrowing from the plan. Those four things, done, change someone’s trajectory more than any fund selection.
If your company’s plan is one I advise, you can sit down with me at no cost to you. That’s part of what your employer pays for, and it’s the part most people never use. Bring your login, your last statement, and whatever’s been nagging at you.
If your plan isn’t one of mine, you’re still welcome to reach out. I’d rather answer a question and have you go do the right thing on your own than watch someone leave a match on the table for another five years.
The employee deferral limit is $24,500 for 2026. Participants age 50 and older can add a catch-up of $8,000, and those turning 60 through 63 during the year may add $11,250 if the plan offers it. Total contributions including employer money are capped at $72,000 per person.
For someone who does not want to actively manage investments, a target date fund matching the approximate year of retirement is a reasonable default. It provides a diversified allocation that becomes more conservative over time. The more common problems are sitting in a stable value or money market fund for decades, or holding several funds that all own similar assets.
The deciding factor is whether your tax rate is likely to be higher now or in retirement. Traditional contributions reduce taxable income today and are taxed on withdrawal. Roth contributions are taxed today and come out tax-free. Workers early in their careers often benefit from Roth, while those in peak earning years often benefit more from the traditional deduction.
Send me your plan documents or last year’s returns and I’ll tell you what I see — whether or not you end up working with me.
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Sage W. DeMull, PPC® is a fee-based fiduciary advisor at DeMull Financial, 2624 Lake Lansing Rd Ste 200, Lansing, MI 48912. Figures reflect 2026 IRS limits per Notice 2025-67 and are adjusted annually. This is general information, not individualized tax, legal, or investment advice — your situation may differ, and you should consult your own tax professional. Securities and advisory services offered through LPL Financial, member FINRA/SIPC.