I am LOSING MONEY IN MY 401K, what do I do now? I’ve been asked this question at last 50 times in the last month alone and I totally understand why. Losing money that you have stored away in your 401k for retirement can be extremely stressful and depressing.
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The 401(k) is a hallmark of American retirement savings. This employer-sponsored account is utilized by millions, who can invest in stocks and other assets through their 401(k) and build up a nest egg for retirement.
However, when an economic downturn or recession occurs, 401(k)s are not immune to the risks. Because holdings in these accounts are often largely tied to stocks, 401(k) losses can be steep if portfolios aren’t structured in the best way.
That is not to say avoid saving through a 401(k). Instead, if a recession happens, try to keep a level head and adjust your retirement saving strategies so that you can minimize risk and still protect your financial stability. WATCH THIS VIDEO if you are losing money in our 401k and don’t know what to do.
RETIREMENT CALCULATOR:
Diversify your investments
Portfolio diversification should be a priority for every retirement saver. This concept basically relates to spreading your 401(k) contributions across several different categories of investments.
This is done to limit risk and 401(k) losses. For example, if someone invested solely in equities, any stock market decline might affect them disproportionately.
Depending on the 401(k) plan your employer offers, you might have the option to invest in different asset classes, including:
Stocks.
Bonds.
Mutual funds.
Real estate.
Annuities.
Commodities and foreign currencies.
Personal circumstances and financial goals will ultimately determine your optimal allocation. Just keep in mind, a diversified retirement portfolio is one that might be best able to see you through economic uncertainty.
Try not to panic
It can be hard to keep calm when the economy or stock market tanks. After all, these events will have a direct impact on the retirement savings in your 401(k).
However, as best as you can, keep calm. Markets rise and fall but mostly rise over the long term. It is important to keep this perspective when short-term losses occur. If you’re still decades away from retirement, there’s lots of time to recover and adjust your risk tolerance.
Checking your balance daily during a market crash may only compound your stress or lead to rushed decision-making, like taking out money. Choosing to cash out early will come with considerable tax obligations. Withdrawals from a 401(k) before age 59 ½ are charged an additional 10% tax on top of income tax (except for Roth 401(k)s, which use after-tax income). Certain hardship exceptions exist, however, including those introduced by the CARES Act.
If you are closer to retirement age and concerned with your savings, speaking to a financial advisor can help you find the best solutions or guidance on how to handle near-term 401(k) losses.
Research target-date funds
If you want to safeguard your retirement portfolio against future recessions or market declines, consider allocating some of your 401(k) toward target-date funds (TDFs) when things are more stable.
TDFs are a class of mutual funds whose holdings become more conservative as they approach the target date. The assets the fund holds are dynamically managed. Often, the fund is weighted toward stocks initially, with a gradual rebalancing toward assets that provide fixed income and less risk.
Many different fund timelines exist, so investors can find a TDF that aligns with their planning. Investing in one may help you avoid significant 401(k) losses near your target retirement age.
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DISCLAIMERS & DISCLOSURES
This content is for education and entertainment purposes only. Tray does not provide tax or investment advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal.
#401k #401kinvesting #401kretirement…(read more)
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Are you freaking out about your 401K??????
Great video, just curious how people split their pay, how much of it goes into savings or investments. I earn around $125K per year but nothing to show for it
Nope yall better pull all your money out. The economy is not about to recover.
what if your company stopped putting money into it and I can't put money into it myself cause I'm technically still employed to them and for some reason they don't let me move it to a personal account
I’m down ~160k. Not worried as I have 25 years till retirement
Not when you’re 72 years old and still working.
I have a large percentage of my 401K invested in mutual funds I manage myself – right now I am loosing money and considering pulling out of investments and put 100% back into short term reserves.
Down 43%. Inflation is horrible and gas prices are insane. I need money now. So I’m decreasing my percentage until it levels out
I was raised that the stock market was a rich man’s game(yep, grandparents lost it all back in the day and preached that forever) but I’ve been around long enough to truly taste just how profitable it can be. Surely times are desperate in a down market, but in my opinion there’s no market condition a proper financial advisor can’t scale through, especially ones that’s been around since the crisis of ’08 and before.
What advice for seniors in their 70s? They lost $10,000 already. Please advise.
Mine is down 9.53 percent
Have huge urge…to stop contributing..hubby is 60..we don't have time to recoop..Fidelity has not helped much..just said we are stock light..pretty stressed..We are diversified and low risk…well we are still loosing..I'm just sick about it..I feel we should at least stop contributing right??
Put my 401k money in a money market a few weeks ago that keeps it steady and pays a little interest in the meantime. I watch the market everyday so I’ll jump back in when sell off slows down
You won me over with the Hodge Twins comment! I've lost over $16k in my retirement this year!
lol I appreciated the hodge twins reference
thanks
Thank you Tray very informative
Good info. I was making money hand over fist with President Trump in office. Now with Biden's policies in effect, my wife and I have lost $24,000 this year alone. Elections matter!
Lets go brandon
Biden is doing what's right so don't start to say that. They need to stop putting barriers for him like they did for president Obama.
I did Wht you said I shouldn’t have . I panicked and put all my allocations into a money market fund in my Roth . Any advice. I’m 46 and want to retire by 64. Need about .1.2 mil in retirement .
My question is, and no one has answered it.
If any of you have taken accounting, you know that if you take money from one account, the exact same amount goes into another account. So I ask, when it leaves my 401K, who’s account does it go into?
I actually changed my percentage from 6 percent to 10 percent trying to buy more at a cheaper price while it's down . My 401k is invested in the s&p 500 I'm 38 so I have a while until I retire .what do you think?
My 401(k) is down -23% APR YTD right now 🙁 . I'm just worried this is not the end especially with midterms around the corner. I road out the 2020 downturn down to -30% APR, and then during the recovery I banked on a +50% APR. Blue-chip ETFs for the win.
Wow! I lost 20%. I hate 401k.
Thanks for taking the time to upload these videos. Very informative. And I enjoy listening to you. One quick question if you don't mind. I am 60 years old and had 450,000 in my 401k. Mostly in stocks some in bonds. I just lost 50,000 last week. Is there anything you could recommend to save the rest of my balance from going down? I've been thinking about moving it to the stable Income Fund would that be a good idea?. Thanks for your help
thank you man, you brought peace to my mind.