Why is My Retirement Account Losing So Much Money?

Why is my retirement account losing so much money

Maintain a long-term perspective and don’t panic over a decreasing retirement account balance – keep the long view in mind, remembering that market fluctuations are normal and keep going with it!

Traditional IRA accounts offer tax advantages but may lose value with market performance. Aim for a portfolio mix that offers both growth potential and risk tolerance when creating your traditional IRA portfolio.

1. You’re a new investor

As alarming as it can be, watching your retirement account balance decrease is nothing to panic over – it’s a normal part of investing and your portfolio’s stocks, bonds and mutual funds will gain and lose value over time as markets fluctuate – this applies equally to your retirement accounts as they gain or lose value depending on their performance.

As part of your investment evaluation process, it’s also important to keep in mind your goals and timeline. If you’re near retirement age, reducing stock market risk in favor of more secure assets like bonds might be wise.

As a rule, it’s generally best to adhere to your long-term game plan rather than making hasty decisions that could jeopardize your financial future. So take a deep breath and trust that your retirement account will eventually recover. If you need help starting, consult a robo advisor who can assess if your current portfolio aligns with your goals and risk tolerance.

2. You’re closer to retirement

Are You Nearing Retirement Age and Need Re-think Your Saving Strategy?? Investing aggressively while young is fine, but as retirement draws near it may be time to switch over to more conservative investments like bonds to avoid large losses that could severely strain your retirement account.

Adjust your estimates of expenses during retirement accordingly. Certain costs might decrease, such as mortgage payments and payroll taxes, while others could increase due to out-of-pocket prescription costs, travel, home improvement projects and healthcare needs. A general guideline suggests replacing 70% of pre-retirement income; our calculator uses this figure by default, however you can change this value according to your own individual needs.

3. You’re in a recession

An economic slowdown often causes retirement accounts to suffer as stock markets fluctuate and can become volatile, often frightening investors.

Recessions often lead to increases in unemployment rates, signaling trouble for the overall economy. Luckily, though, recessions don’t usually last too long and usually rebound after experiencing some sort of setback.

Staying invested through a recession will allow your 401(k) and other tax-deferred retirement accounts to rebound over time, but if your investing plan cannot withstand it, it might be prudent to change tactics during that time.

No matter the economy’s current condition, saving for retirement should still remain a top priority. Create a budget and cut expenses to maintain savings – the sooner you start saving now, the better off you’ll be in future years!

4. You’re investing too much in one asset class

When markets shift from bulls to bears, even experienced investors can feel concerned about the balance in their 401(k). It’s important to remember that your account isn’t designed as a savings account but as an investment vehicle designed to grow over time so you can withdraw it once it comes time for retirement.

Your 401(k) balance may appear to be diminishing, but remember that you paid a price for these stocks, mutual funds and index funds–they will return in due time. Selling at depressed prices during market downturns should be avoided at all costs!

Consider rebalancing your portfolio to move some assets into more secure bonds–or, if you’re decades from retirement, leave some room for growth in riskier stocks–that way, you can weather any market ups and downs while still having a solid plan in place for retirement.

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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