4 Quick 401(k) Tasks for a Strong 2026 Start: A Value Investor's Guide

The most fundamental step in building a retirement nest egg is to claim your employer match in full. This isn't just good advice; it's the first principle of disciplined saving, akin to a value investor seeking a guaranteed return before taking on risk.

For most workers, the typical match is up to 6% of their salary. To receive this benefit, you must contribute at least that percentage of your pay. In essence, your employer is offering you free money-money that compounds over decades without any cost to you. This is a risk-free return on your investment, a rare opportunity in any market.

From a long-term perspective, this step is non-negotiable. It sets the foundation for compounding, the engine of wealth creation. By contributing the minimum needed to capture the full match, you ensure that every dollar you save has the maximum possible starting point. It's a simple act of discipline that aligns with the patient, compound-focused mindset of value investing. You wouldn't pass up a guaranteed 100% return on a dollar, and you shouldn't pass up a 100% return on your retirement savings either.

Task 2: Switch to Percentage-Based Contributions

The problem is simple but costly. Many people set a fixed dollar amount to contribute to their 401(k) each paycheck. When a raise comes, that fixed amount doesn't change. As a result, your savings rate as a percentage of income dips. You miss out on the chance to save more from the very first paycheck after the raise.

This is where automation is a hallmark of a disciplined, long-term strategy. Switching to a percentage-based contribution solves this. Your deferral rate is set as a percentage of your paycheck, not a dollar figure. When your salary increases, the dollar amount automatically scales up. You capture the full benefit of the raise for your retirement savings without lifting a finger.

From a value investing perspective, this is about embedding discipline into the system. It prevents the common human pitfall of letting savings rates fall over time. It ensures your compounding engine runs at full capacity, year after year, regardless of income changes. It's a small administrative change that has a powerful, lasting effect on your ultimate nest egg.

Task 3: Review Fees and Asset Allocation

The final two tasks are about protecting your hard-earned savings and ensuring your portfolio works efficiently for you, not against you. This is the core of a value investor's discipline: minimizing costs and preserving capital as you approach the finish line.

First, scrutinize the fees. High expense ratios are a silent thief, eroding the power of compounding over decades. A seemingly small difference-say, 1% versus 0.25% annually-can mean tens of thousands of dollars less at retirement. The evidence underscores the importance of knowing your plan's details, including fees. Your goal should be to shift allocations toward lower-cost index options where possible. These funds offer broad market exposure at a fraction of the cost of actively managed funds, allowing more of your returns to stay in your pocket.

Second, as you near retirement, a more conservative mix of stocks and bonds is prudent. The evidence shows the average 401(k) balance for those in their 60s is $568,040, but many worry about whether this is enough. The key is to protect the principal you've built. Shifting toward bonds and other fixed-income assets reduces the portfolio's volatility and downside risk during market downturns. This isn't about chasing growth; it's about ensuring your savings are there when you need them. It's a defensive move, much like a value investor would make when the market becomes frothy, to safeguard the capital that has been carefully compounded over the years.

Together, reviewing fees and adjusting your asset allocation are essential steps to make your portfolio work for you. They ensure your money compounds efficiently and your nest egg is positioned to support your retirement years without unnecessary risk.

Task 4: Update Beneficiary Designations

The final, and perhaps most personal, task is to update your beneficiary designations. This is a simple five-minute administrative step that provides profound peace of mind. Yet, the risk of neglecting it is serious. If your forms are outdated, your 401(k) can be treated as part of your estate. This triggers probate, a legal process that can cause significant delays and potential disputes among heirs. The money you've worked so hard to accumulate may not reach your intended loved ones as planned.

From a value investor's perspective, this is about protecting the principal you've built and ensuring your legacy is carried out with clarity. It's a low-cost, high-impact move to safeguard the capital that has been compounded over the years. The evidence underscores that these quick, high-impact moves are designed to be manageable, and updating beneficiaries fits that mold perfectly. You don't need to understand complex investment strategies or market cycles; you simply need to confirm who should receive your account.

The bottom line is straightforward. Take a few minutes now to ensure your paperwork reflects your current wishes. It's a small act of discipline that prevents future complications and guarantees your savings support your family exactly as you intend.