Are You Sabotaging Your Retirement Without Knowing It?
Fraley Carlton, MBA. AIF®, CWS®
In an age where you can check your 401(k) balance in seconds, many investors believe frequent monitoring is a smart financial habit. But research shows the opposite may be true.
Behavioral economists Shlomo Benartzi and Richard Thaler found that the more often people check their retirement accounts, the lower their long-term returns tend to be. Understanding why this happens can help you make better decisions and grow your retirement savings more effectively.
The Psychology Behind Poor Investment Decisions
One of the biggest drivers of underperformance is something called myopic loss aversion.
This concept explains that:
• People feel losses more strongly than gains
• Frequent checking increases exposure to short-term losses
• This leads to overly cautious investing decisions
When investors frequently monitor their 401(k), they’re more likely to react emotionally. This often leads to pulling back from stocks, which historically offer higher long-term returns.
Why Frequent Checking Leads to Lower Returns
Stock market volatility plays a major role in investor behavior.
Historically, short-term market declines have been common, but the likelihood of positive returns has increased significantly over longer holding periods. While daily market movements can feel unsettling, investors with longer time horizons have historically experienced a much lower probability of negative returns.
The takeaway:
The shorter your focus, the riskier investing feels, even when it isn’t over the long term.
How Technology Made Investing Harder (Not Easier)
In the past, checking your 401(k) required effort, such as phone calls or waiting for mailed statements. Today, access is instant via the internet.
This increased accessibility has changed investor behavior, making it easier than ever to monitor retirement balances frequently. Research from Fidelity and the Investment Company Institute suggests that digital engagement with retirement accounts has risen significantly as mobile access has become commonplace. While easy access is convenient, it increases the temptation to react emotionally, which often leads to poor timing decisions.
Emotional Investing: A Costly Mistake
During major market downturns, such as:
• The 2008 financial crisis
• The early stages of the COVID-19 pandemic
Many investors sold stocks at low prices. While some later reinvested, they often did so after the market had already recovered. This means they locked in losses and missed gains.
How Often Should You Check Your 401(k)?
Experts recommend a balanced approach:
• Once a year: ideal for long-term focus
• Quarterly at most: enough to stay on track without overreacting
Setting a schedule reduces impulsive behavior and keeps your focus on long-term goals.
3 Smart 401(k) Habits to Improve Long-Term Returns
- Create a Long-Term Investment Plan
A clear retirement plan helps eliminate emotional decision-making. Stick to your asset allocation unless your personal situation changes (not the market).
- Use “Set It and Forget It” Strategies
Automated investment options can improve discipline:
• Target-date funds: adjust risk as you approach retirement
• Managed accounts: combine professional advice with automation
These tools reduce the need for constant monitoring and decision-making.
- Build Barriers Against Impulsive Decisions
Simple changes can reduce bad habits:
• Remove investment apps from your phone
• Pause before making any trades
• Ask: Has my life changed, or am I reacting to the market?
If it’s only the market, your best move is often no move at all.
When to Make Changes to Your 401(k)
There are valid reasons to adjust your investments, but they should be based on life events, not market swings:
• Retirement timeline changes
• Income or savings rate adjustments
• Risk tolerance shifts
Final Thoughts: Sometimes Doing Less Is the Best Strategy
The key to successful retirement investing isn’t constant attention. It’s consistency and discipline.
By checking your 401(k) less often, you:
• Reduce emotional decision-making
• Stay focused on long-term growth
• May increase your chances of better returns
Bottom line: The less you react to short-term noise, the more likely you are to build lasting wealth.
Sources
UBS Wealth Management analysis of historical S&P 500 Index returns using data from Bloomberg and Morningstar Direct.
Research and behavioral finance concepts referenced in this article are based on work by behavioral economists Shlomo Benartzi and Richard Thaler, along with historical market data and investor behavior research from Fidelity Investments and the Investment Company Institute (ICI). Historical return data referenced relates to the S&P 500 Index and long-term investing trends.
Any opinions are those of Fraley Carlton and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Past performance may not be indicative of future results. Future investment performance cannot be guaranteed. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct.
S&P 500: This index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. It consists of 400 industrial, 40 utility, 20 transportation, and 40 financial companies listed on U.S. market exchanges. This is a capitalization-weighted calculated on a total return basis with dividends reinvested. The S&P represents about 75% of the NYSE market capitalization.
Fraley Carlton, MBA. AIF®, CWS
PRESIDENT
Pentas Wealth Management
Private Wealth Advisor
Raymond James
PHONE: 229.616.6162