401(k) Tune-Up: Steps to Optimize Your Retirement Savings
- John J. Diak, CFP®
- Jun 2
- 5 min read
When was the last time you checked in on your 401(k)? If it’s been a while, you’re not alone—but a quick tune-up could make a big difference for your future. For many professionals, a 401(k) is a staple of their benefits package—something you set up when starting a job and then rarely think about. You may have filled out the paperwork, selected a contribution amount, and glanced at the investment options, but beyond the occasional balance check, it might not get much attention. If that sounds familiar, it may be time for a tune-up.
At some point, your 401(k) could become one of your most valuable assets—even more valuable than your home. But unlike your house, your 401(k) is designed to provide income in retirement. Given its long-term importance, it’s worth taking a closer look to ensure it’s working effectively for you. The good news? A 401(k) tune-up doesn't have to be complicated. You can better position your long-term financial well-being with a few strategic adjustments.
Here’s how to check your progress and make sure your 401(k) is set up for success.
Are You Contributing Enough?
Many Americans aren’t saving enough in their 401(k)s to meet their long-term retirement goals. Your contribution rate should reflect your retirement goals while also considering your current financial situation and career stage. [1]
If your employer offers a matching contribution, make sure you're contributing enough to take full advantage of it— otherwise, you're leaving free money on the table. Over time, those extra contributions can significantly strengthen your retirement savings.
A simple yet effective strategy to boost your 401(k) is to increase your contributions by just 1% each year. While this might seem like a small adjustment, it can have a meaningful impact over time, thanks to the power of compounding. Be sure to stay aware of annual contribution limits, which are changed by Congress periodically. Reviewing these limits can help ensure you get the right tax advantages along the way. [2]
Many workplace retirement plans include automatic escalation features, making it easier to gradually increase your savings each year. However, it’s important to be proactive about adjusting your contributions when your financial situation changes for the better—such as receiving a raise, paying off debt, or having fewer expenses as an empty nester.
By making minor, strategic adjustments now, you can build your retirement savings more effectively.
Take a Closer Look at Your Investment Choices
Choosing the right investments in your 401(k) is a key part of managing your retirement savings. Your investment strategy should align with factors like your age, your family's financial goals, and your comfort level with market fluctuations. The goal is to build a portfolio that matches your retirement timeline and risk tolerance. Most plans offer a range of mutual funds, from conservative to aggressive, as well as target-date funds, which automatically adjust your asset allocation as you get closer to retirement. [3]
Diversification is essential. A well-balanced portfolio spreads investments across different asset classes—such as stocks, bonds, and exchange-traded funds (ETFs)—to help manage risk and support long-term growth. [3]
Once you establish your portfolio, periodic rebalancing can help keep it aligned with your strategy. Over time, market shifts can cause your asset mix to drift, potentially increasing your risk exposure.
Check Your Fees
401(k) fees may seem minor, but over time, they can significantly impact your retirement savings. Investment management fees, administrative costs, and service charges all add up, potentially reducing your account balance more than you realize. [4]
Consider this: If you start with $45,000 in your 401(k) and earn an average annual return of 7%, a 0.5% fee would allow your balance to grow to around $408,000 over 35 years. But if that fee increases to 1.5%, your balance would only reach about $293,000—a 28% difference. Clearly, fees matter.
While employers are required to keep fees reasonable, you still have control over your investment choices. Actively managed funds often come with higher fees, while lower-cost index funds may offer similar long-term returns. Understanding your plan’s cost structure and selecting lower-fee options where possible can help you keep more of your hard-earned savings.
Maximize Your Catch-Up Contributions (If Eligible)
Are you making the most of catch-up contributions? If you’re 50 or older, the IRS allows you to contribute beyond the standard 401(k) limit—an opportunity that can help strengthen your retirement savings.
In 2025, the contribution limit for 401(k) plans is $23,500, with additional catch-up contributions available:
Ages 50 to 59 and 64 or older: You can contribute an extra $7,500, bringing your total potential contribution to $31,000.
Ages 60 to 63: A new provision allows for "super" catch-up contributions of up to $11,250, increasing your total potential contribution to $34,750. [6]
For SIMPLE IRA and SIMPLE 401(k) plans, the 2025 catch-up contribution limit is $3,500. Traditional and Roth IRAs also permit catch-up contributions of up to $1,000 annually. These additional savings can significantly improve your long-term financial outlook by leveraging tax advantages and compounding growth.
Looking ahead, changes under the SECURE 2.0 Act will affect how some high earners make catch-up contributions. Beginning in 2026, individuals earning more than $145,000 in the prior year must direct these contributions into a Roth 401(k), meaning contributions will be after-tax. However, withdrawals in retirement will be tax-free. Those earning $145,000 or less can continue contributing to a traditional pre-tax 401(k). [6]
If you're behind on savings or simply want to boost your retirement fund, catch-up contributions provide a valuable way to close the gap and better prepare for your future.
Stay on Track with Regular 401(k) Tune-Ups
If you haven’t reviewed your 401(k) lately, now is a great time to check in. Keeping a close eye on your retirement portfolio helps ensure you’re making the most of your savings. Market fluctuations and economic shifts are inevitable, but making informed, strategic adjustments—rather than reacting emotionally—is how to stay on course.
Regular evaluations allow you to identify opportunities to adjust your investments, rebalance allocations, and take full advantage of tax-efficient strategies. Even small, proactive changes matter. Refine your savings strategy, change contributions, or explore additional investment options as needed, and keep doing it over time.
If you need help optimizing your 401(k), we’re just a call away. Let’s work together to strengthen your financial future!
Sources
1. https://www.cnbc.com/2024/06/25/how-much-money-americans-have-in-401ks-at-every-income-level.html
3. https://www.investopedia.com/articles/personal-finance/091515/best-strategies-maximize-your-401k.asp
John J. Diak, CFP® is the Principal & Client Wealth Manager at Oatley & Diak, LLC in Parker, Colorado. He assists clients through many difficult lifestyle changes such as business downturns, retirement planning, divorce, the death of a spouse, and family estate issues among others. Oatley & Diak, LLC is a family-run registered investment advisory (RIA) firm that provides clients with investment management and financial planning services in a hands-on, intimate environment. Learn more about them at oatleydiak.com.
The opinions expressed in this material are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security, investment, or other financial product.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
This material has been prepared in collaboration with Crystal Marketing Solutions, LLC, and has been edited with the assistance of artificial intelligence tools. The information presented is based on sources believed to be reliable and accurate at the time of publication. This material is for educational purposes only and does not necessarily reflect the views of the author, presenter, or affiliated organizations. It should not be construed as investment, tax, legal, or other professional advice. Always consult a qualified professional regarding your specific situation before making any decisions.