We get it. Assuming the responsibility of managing your retirement assets can be tricky. Should you pick a riskier portfolio, or one that’s pretty conservative? How much should you save? Have you taken a look at your employer contributions? We know that you may have a lot of questions. If investing seems like too much for you to handle on your own, consider partnering with an investment advisor to help navigate some of the confusion. When you do take a look at your current investments here are some more tips you should consider:
Don’t back out of the market completely. If you feel the need to become more risk-averse, it’s far better in the long-term to take one step down the risk ladder until you feel more confident with the stability of the markets, than it would be to sell all your equity assets and move to cash where you will probably remain long after the stock market recovery is under way.
Guard against inflation. People have a tendency to forget that with any inflation, a dollar today won’t buy the same amount of goods in the future. Currently, inflation is very low; however, it is no guarantee it will remain low in the future. Be mindful to select investments that will out perform inflation over the long haul.
Think twice before taking a distribution or loan. There can be some considerable adverse tax consequences when taking a plan distribution before age 59 1/2. And though you may be paying back your retirement account through a loan (if permitted through your plan), you are not realizing any investment growth. Explore accessing other funds in a time of need, before jeopardizing your retirement accounts.
Continue to save for retirement. The main factor in how much you will have in your retirement account is the amount you contribute. Continuing to save will soften the impact of market losses. And because of the losses, you may not only need to continue to save, but to increase your contribution, in order to stay on track with your retirement goals. In addition, by continuing to contribute, you will be taking advantage of stock market “sales” by buying additional equities at much lower prices.
Maximize your employer match. If your plan offers a matching contribution, you should strive to contribute at least the minimum amount to receive these additional contributions for retirement.
Take advantage of catch-up contributions. If you are age 50 or older, you can contribute additional amounts each year into your retirement plan, providing an opportunity to make up for lost time.
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