The headlines have been warning about the drop in 401k balances. Here is what you should be aware of!
Have a question you want to be answered on the show? Call or text 574-222-2000 or leave a comment!
Want to speak with a Certified Financial Planner™? Visit or call 574-247-5898.
Find more information about the Wise Money Show™ at
LINKS:
Be sure to stay up to date by following us!
Facebook –
Instagram –
Twitter –
Want more Wise Money™?
Read our blog!
Listen on Podcast:
Subscribe on YouTube:
Mike Bernard, CFP® offers advisory services through KFG Wealth Management, LLC dba Korhorn Financial Group. This information is for general financial education and is not intended to provide specific investment advice or recommendations. All investing and investment strategies involve risk, including the potential loss of principal. Asset allocation & diversification do not ensure a profit or prevent a loss in a declining market. Past performance is not a guarantee of future results….(read more)
LEARN MORE ABOUT: 401k Plans
REVEALED: Best Investment During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
HOW TO INVEST IN SILVER: Silver IRA Investing
Warnings About 401k Balances: Plan for Adequate Retirement Savings
As retirement approaches, many workers rely on their 401k balances to sustain them during their golden years. However, it is crucial to understand the potential pitfalls and make informed decisions about your 401k savings to ensure a financially secure retirement. Here are some warnings that you should consider when assessing your 401k balance.
1. Inadequate Savings: One of the most significant concerns is having an insufficient amount in your 401k account. Many financial experts suggest saving at least 10-15% of your income consistently throughout your working life to have an adequate nest egg. Falling short of this recommendation may lead to a lower quality of life during retirement.
2. Overreliance on 401k: Relying solely on your 401k savings can be risky. This is especially true if factors beyond your control, such as market downturns or unexpected expenses, deplete your balance. It’s important to diversify your retirement savings with additional investment options, such as individual retirement accounts (IRAs) or taxable investment accounts.
3. Neglecting Asset Allocation: Your 401k balance can suffer if you neglect proper asset allocation. Diversifying your investments across different asset classes, such as stocks, bonds, and cash, can help mitigate risks and stabilize returns. Regularly reviewing and rebalancing your portfolio can ensure your investments align with your risk tolerance and retirement goals.
4. Short-term Market Volatility: The stock market is known for its short-term volatility, which can significantly impact your 401k balance. While it’s essential to keep an eye on market movements, making impulsive decisions based on short-term fluctuations can be detrimental to long-term gains. Consult a financial advisor or do thorough research before making any major changes to your investment strategy.
5. High Fees: Many 401k plans charge administrative fees, investment management fees, and other expenses that can eat into your overall returns. It’s crucial to understand the fees associated with your plan and compare them to alternative investment options. Consider switching to lower-cost investment vehicles if the fees in your current plan seem exorbitant.
6. Inadequate Employer Contributions: Some employers offer matching contributions to their employees’ 401k plans. It’s essential to take full advantage of this opportunity, as it is essentially free money. Failing to maximize employer contributions is akin to leaving potential earnings on the table.
7. Inflation’s Effects: It’s important to factor in inflation when evaluating your 401k balance. Over time, inflation erodes the purchasing power of your savings. To combat this, focus on investments that offer returns higher than the inflation rate, such as stocks, and periodically adjust your savings goals accordingly.
8. Longevity Risk: Underestimating your life expectancy can be a grave mistake when planning for retirement. With advancements in healthcare and rising life expectancies, you need to ensure your 401k balance is sufficient to sustain you throughout an extended retirement period. Plan for longevity to avoid running out of money in later years.
In conclusion, while a 401k balance is a valuable retirement asset, it’s essential to be aware of potential warning signs. Take steps to ensure adequate savings, diversify your investments, and avoid common pitfalls such as neglecting asset allocation or high fees. By actively managing your 401k balance and seeking professional advice when needed, you can be on your way to a financially secure retirement.
Not making up to a million before retirement is unfulfilled retirement.!! I’m 50 and my husband 55 we are both retired with over $3 million in net worth and no debts. Currently living smart and frugal with our money. No longer putting blames on FED for our misfortunes. Saving and investing lifestyle in the stock market made it possible for us this early, even till now we earn weekly.!!.
Your Fear Must Sell…..LOL.
This is dumb.
Here’s why
If you have say that $140,000 401k, then say you leave your job and get a different job and open a new 401k. BOOM!! the *AVERAGE* 401k went down. Then say you rolled that old 401 in an ira. That too brings down the **AVERAGE** 401k.
Not every body’s investable assets went down.
I will forever be indebted to you you've changed my whole life continue to preach about your name for the world to hear you've saved me from a huge financial debt with just little investment, thanks so much Mrs. Bonnie Antelo
The problem with a 401k is that you can only invest a max of 7500 per year. That is not going to offset the huge losses we have been experiencing since 2018. There should not be limits on the amount you can invest especially since a 401k is taxed twice when you start withdrawals. Furthermore, there is no protection during retirement when you are living on a FIXED income. If you move it all out to a safe haven then you have to pay huge taxes. Bottom line is a 401k is a complete scam and cannot hold a candle to a Roth. Whole system is set up to make you pay taxes to line the pockets of the wealthy and keep you working until you drop. Geez so glad I had that 401k when you die and never get to use it. SCAM, SCAM, SCAM.
More people moved jobs and started new 401k accounts?
Apart from the Gemstones haircut, this dude is a zero in the information department. – dollar cost averaging is the summation, except dude doesn’t mention it.
This message is geared towards people accumulating with dollar cost averaging, but didn’t address people in retirement, withdrawing from 401k type accounts.
Buy index funds, gold and silver
Rut row