Have you lost money in your retirement plan? Here’s what to do.

Have you lost money in your retirement plan?  Here’s what to do.


The past eight months have been very volatile from a stock market perspective. So many people now incur annual losses in their investment portfolios.

If your 401(k) or IRA has been a hit this year, you might start to panic. After all, you need that money to grow year after year so you can supplement your Social Security income well into retirement. And the last thing you want is to keep contributing money to your retirement plan, only to see your balance go down.

A person on the couch covers his face.

Image source: Getty Images.

While losses in a retirement plan can be upsetting, they’re also on a par now. Here’s what you should do if your 401(k) or IRA takes a hit.

1. Don’t lose your temper

It’s only natural to be thrown into a loop if your retirement plan is less valuable now than it was at the beginning of the year — especially if you’ve been contributing to it steadily since January. But the one thing you shouldn’t do is start offloading inventory into your retirement plan to reduce losses. If you sell investments now, you may incur losses, instead of giving your savings a chance to recover.

If you’ve been away from retirement for many years, the current status of your 401(k) or IRA isn’t something you should lose sleep over. As such, your best bet is not to panic selling the investments, but instead let this period of volatility run its course.

2. Make sure you are diverse

The money you invest for retirement doesn’t just have to stay in one sector of the market. If you go this route, it may take longer for your portfolio to recover from downturns and may limit the growth of your 401(k) or IRA.

Take a look at your investments and make sure they target a wide range of industries. If you’re not, consider branching out or buying index funds, which allow you to invest in the broad market without having to research different companies individually.

3. Keep the money away

It may seem counterintuitive to continue funding a 401(k) or IRA at a time when the stock market is so shaky. But actually, it’s a good time to invest money because stocks are pretty low across the board, so you can collect stocks at a discount.

Furthermore, if you’re saving for retirement in a 401(k) or traditional IRA, that means you get immediate tax relief on the money you contribute. This is not something you should give up. In fact, not funding one of these plans could push you into a higher tax bracket, so that alone is a good reason to keep contributing.

Look at the light at the end of the tunnel

This is not the first time that investors have had to endure a prolonged period of turmoil in the stock market. But in the past, the stock market has always been able to recover from a downturn, so there is no reason to believe that this time will be different.

As such, try not to focus on the fact that your retirement plan is down. Instead, try to focus on the future and keep funding that account so you can retire with the nest egg you deserve.





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