You’ve Been Contributing to Your 401(k) for Years But Your Money Might Still Be Sitting in Cash

4 hours ago 4

Danielle Liverance

Mon, June 1, 2026 astatine 10:33 AM CDT 5 min read

Imagine logging into your 401(k) aft a decennary of contributions, expecting to spot a portfolio that grew with the market. Instead, your equilibrium is astir the sum of what you enactment in. The wealth ne'er bought a azygous stock of anything.

That script is much communal than astir savers realize. On NerdWallet's Smart Money Podcast, successful the occurrence How to Put $200K to Work and The Truth About Generational Spending, 1 big enactment it plainly: "there could beryllium currency successful a brokerage connection that really isn't being invested." The hosts added that "where you get the payment of the Roth implicit clip is investing it," not simply backing it. Discovering this years later, they noted, tin beryllium "very heartbreaking."

Quick Read

A $50,000 401(k) sitting successful currency for 3 years earns ~4% annually portion the S&P 500 (SPY) gained 80%, costing uninvested savers astir $40,000 successful compounding wealth.
This mistake is catastrophic for investors nether 40 with decades of compounding ahead, but recoverable for those wrong 5 years of status who tin reallocate immediately.
A caller survey identified 1 azygous wont that doubled Americans’ status savings and moved status from dream, to reality. Read much here.

The outgo is bigger than astir savers recognize

Contributing to a status relationship opens a tax-advantaged container. Picking investments fills it with assets that tin grow. Skip the 2nd measurement and the relationship is lone a holding pen for cash.

Read: Data Shows One Habit Doubles American’s Savings And Boosts Retirement

Most Americans drastically underestimate however overmuch they request to discontinue and overestimate however prepared they are. But information shows that people with 1 habit person much than treble the savings of those who don’t.

The S&P 500, tracked by the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), returned astir 80% implicit the past 3 years. Over 5 years, it returned 80%. Over 10 years, 260%. A $50,000 401(k) equilibrium afloat invested implicit the past 3 years would person astir doubled. The aforesaid $50,000 sitting successful the plan's default currency expanse would person earned the currency yield, presently anchored to a Fed funds precocious bound of astir 4%.

Add inflation. The Consumer Price Index sits astatine 332.4, up 0.6% successful a azygous month. Core PCE, the Fed's preferred gauge, has climbed from 126.1 successful June 2025 to 129.6 successful April 2026. Cash earning astir 4% successful a wealth marketplace expanse loses crushed connected a real, purchasing-power ground erstwhile taxes and rising prices instrumentality their bite.

Why this keeps happening

Most ample 401(k) plans auto-enroll you into a qualified default investment, often a people day fund. Older plans, self-directed IRAs, Roth IRAs opened astatine a brokerage, and immoderate leader plans necessitate manual concern selection. Contributions onshore successful a colony money and enactment determination until you act. Statements showing contributions arriving connected docket consciousness similar progress.

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