If you're someone who contributes money to an IRA or 401(k) plan each month, you should know that you're doing a great thing for your future. But saving for retirement isn't enough.
It's important to invest your retirement savings so that money is able to grow over time. And remember, it needs to grow enough to outpace inflation.
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But in the course of investing your IRA or 401(k), you might end up making some mistakes that cost you. Here are three to avoid in 2026.
1. Investing too conservatively if retirement is many years away
Investing in the stock market carries risk. There's really no getting around that. But if you let your fear of losing money lead you to avoid investing in stocks, it could cost you in the form of a nest egg that isn't robust enough to supplement your Social Security benefits.
Let's say you manage to save $500 a month for retirement over 40 years. At an annual 8% return, which is a bit below the stock market's average, you're looking at a nest egg worth a little over $1.5 million.
But let's say you mostly steer clear of stocks and stick to stable investments like bonds. If your portfolio gives you a 4% return over that same window, you'll only end up with about $570,000.
Obviously, that's still a decent amount of money. But you should know that the average monthly Social Security benefit today is only a little more than $2,000 a month. So you might need a pretty large nest egg to set yourself up with a comfortable retirement income. And $570,000 may not do that for you the same way $1.5 million might.
2. Selling off assets if the stock market tanks
We don't know what the stock market has in store for 2026. It could be a year of gains, the market could remain flat, or the market could lose value.
One thing you don't want to do is sell off stocks out of fear if the market ends up crashing. While it can be scary to see that happen, if you leave your portfolio alone to ride out a recovery, you may not end up losing a dime.
Of course, it's important to scale back on stocks in 2026 if you're within a few years of retirement. But if you're in your 30s or 40s and the stock market takes a dive in 2026, it's really not something to worry about in terms of your long-term plans. You have decades for your portfolio to recover, so leaving it alone is generally your best course of action.
3. Not paying attention to investment fees in your 401(k)
One drawback of saving for retirement in a 401(k) plan is not being able to hold stocks individually. Instead, 401(k)s typically limit you to different funds. But it's important to pay attention to the ones you're choosing so that investment fees don't erode your returns.
It's common for 401(k)s to offer a mix of actively managed mutual funds and passively managed index funds. Many index funds manage to outperform active funds at a fraction of the cost from an investment fee perspective. And you may find that an S&P 500 index fund fits into your investment strategy without costing you a lot.
You'll also frequently see target date funds available in 401(k) plans. These plans adjust your investments for risk based on how close to retirement you are.
While target date funds are an easy way to invest your money, their fees can also be high, so be careful about putting your money into one. Plus, target date funds sometimes invest too conservatively. That could hinder your financial goals, too.
If you're committed to saving well for retirement in 2026, that's a fantastic goal to have. But make sure to avoid these investment mistakes so your money is able to go even further for you.
