Why is My Retirement Account Losing So Much Money?

Why is my retirement account losing so much money

Losing money in your retirement account can be unsettling, but with a well-diversified IRA you should be able to weather market downturns without making hasty decisions that compromise its long-term growth potential.

Keep in mind that markets typically rebound over the long-term. Based on your time horizon and risk tolerance, decide if any adjustments need to be made before investing.


Inflation can slowly drain your savings, making it more difficult for you to meet expenses in retirement. Items like gardening tools, plane tickets and piccolo lessons could cost significantly more in 20 years than they do now; thus it is important to factor in inflation when planning savings and investing goals.

If you want to combat inflation effectively, investing in stocks that tend to outstrip it may be the solution, although more conservative investments such as triple A bonds may also help.

Investors should seek ways to protect themselves against inflation by diversifying into Treasury Inflation-Protected Securities (TIPS), commodities, real estate and short-term bonds. Keep in mind that stagflation, which occurs when there is high inflation with low economic growth, can be particularly devastating to retirement accounts – less income means less disposable money to spend, while increased prices make purchasing essential items harder for people.

Market Volatility

Market volatility is an inevitable part of investing, and can significantly alter the value of your retirement accounts. If this fluctuation is new to you, however, its fluctuations could prove stressful.

However, a well-diversified portfolio can withstand these fluctuations without too much damage. Furthermore, it’s wise to review your retirement plan periodically in light of life changes that alter goals and objectives – financial professionals can assist with aligning investments to your changing needs.

Market volatility can engender fearful reactions. When this occurs, it’s tempting to act emotionally by selling assets quickly at low prices; however, this move could seriously compromise your retirement portfolio’s long-term value and put your future at risk.


If you have a retirement savings plan, an economic downturn could wreak havoc with your investments and cause your account balance to diminish. But taking a step back to review long-term plans may lessen the impact of recession on your savings plan.

Recession is defined as two consecutive quarters of real decline in gross domestic product (GDP). The National Bureau of Economic Research is charged with determining whether or not a recession exists and relies on monthly analyses of personal incomes, spending habits of businesses and consumers alike as well as labor market changes and industrial production figures to come to its decision.

Those nearing retirement should consider cutting the amount they withdraw from their 401(k) during an economic downturn to limit withdrawals and prevent depleting assets too quickly. It might also be wise to look into part-time jobs or other sources of income which might offset losses experienced from investing in stocks during such times of uncertainty.


Tax considerations can play an integral part in your retirement savings account. For instance, withdrawing money from a 401(k) or traditional IRA will result in ordinary income rates being applied by the IRS to that amount withdrawn. It would generally be wiser to invest in more secure assets like bonds which act like loans extended by corporations and governments that must be repaid with interest over time.

Consider also how long until retirement you have left; if there are years until then, it might be prudent to invest more in low-risk assets like bonds than volatile stocks as the market declines further.

Remember, too, that withdrawing funds before age 59 1/2 requires paying an extra 10% in addition to income taxes (unless using Roth IRAs which use after-tax dollars). Consult a financial advisor for more information and help creating a strategy to safeguard both short-term losses as well as long-term gains for your retirement accounts.

Raymond Banks Administrator
Raymond Banks is a published author in the commodity world. He has written extensively about gold and silver investments, and his work has been featured in some of the most respected financial journals in the industry. Raymond\\\'s expertise in the commodities market is highly sought-after, and he regularly delivers presentations on behalf of various investment firms. He is also a regular guest on financial news programmes, where he offers his expert insights into the latest commodity trends.

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