You are missing some steps.
Provided you created the file this way
$MyPswd = "xyz1234"
ConvertTo-SecureString $MyPswd -AsPlainText -Force | `
ConvertFrom-SecureString | Out-File -FilePath "C:\pass.txt"
You can convert it back like this
$pswdSec = Get-Content "C:\pass.txt" | ConvertTo-SecureString
$bPswd = [System.Runtime.InteropServices.Marshal]::SecureStringToBSTR($pswdSec)
$pswd = [System.Runtime.InteropServices.Marshal]::PtrToStringAuto($bPswd)
$pswd
Note that you have to create and use the password with the same account !