I work in a field that is being impacted by that new changes. Today my boss hinted at the idea that the company is admitting things aren’t going so hot. I don’t even make $65K a year. I always did what I was told to do by putting as much as possible in an IRA and my 401k. I’m tarrified now. What the heck am I supposed to do with that money?
I keep seeing suggestions on the more extremest subreddits. The prepper subs for instance. I’m so lost. What are your thoughts?
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No. This too will pass and eventually your portfolio will rebound, and that’s very likely to happen before you need to retire in 20-30 years. (Or it won’t and the U.S. will devolve into chaos, open warfare, and the crumbling of the social order, in which case it doesn’t really matter what you do.)
Doing nothing is the best thing you can do for your future. Take emotion out of it..
Keep it in there, and if you’re concerned about your investments talk with a financial advisor who can guide you on how to allocate risk. Taking money out is a horrific idea because you’ll be taxed to hell and back.
Don’t take it out. You get penalized if you do. If you can find a financial planner to help you navigate. If you’re 40 you can’t count of social security being there when you retire so you will want that nest egg. I am 55 and my husband is 60 and we are planning on not seeing social security, so if we get any it will be bonus. This is not a new thing, we have been planning on no social security since we got married in our 20’s. My adult children are already socking away in their 401K and are planning on using a financial planner once they get a good amount going (both in their 20’s). As of money in the bank you should have 6 months of ready available cash for emergency. The rest you need to get out of the bank and invest which will give you more money than bank interest.
The worst thing to do in a downturn is pull out. You’ve got years to recover from this if you let it sit. Yes, it’ll be scary, but I went through 2008’s fall and even kept investing during. Did pretty well with it.
Don’t touch the money. Pretend you don’t even know it’s there. Out of touch and out of mind for 25 years. You will be pleasantly surprised!
Withdrawing during a downturn is generally a really bad idea.
Never bet on the apocalypse because if it happens because if it happens you are well and truly fucked no matter what. But if the apocalypse doesn’t happen, you’ll have completely fucked yourself over for nothing.
The only “betting on the apocalypse” that I’ll allow is liquidating to fund your relocation with friends/family in another country where you are likely to be able to build a life. It works but is definitely opting to live life on hard mode.
Don’t panic. Delete any financial apps now and do not look for a long long time. We saw really bad things during Covid and they eventually leveled and even swung upwards, right?
We are lucky to have time on our side right now. I’d be worried as hell if I was closer to retirement but frankly we have 30 years.
You should ask HR if any of the benefits you have come with financial information services.
I worked with a guy in 2008 who liquidated his 401k during the housing crash. Just a few years later and the markets were better than they were before the crash, and he missed out on all that growth. By the way, he was about 44. I wouldn’t be surprised if he’ll be forced to work much longer than he wanted, to get back the money he lost. This crash will rebound, if not tomorrow, then next month or next year. You are still young. Ride out the dip and whatever you do don’t liquidate.
Do you have a 6 mos emergency fund? If you do then do nothing with your existing investments and direct investment dollars to areas that you are more comfortable with and help diversify your portfolio. If you think your job is at risk and you’re contributing to your 401k above the company match…reduce to the match max and direct your savings to reducing debt or increasing your emergency fund.
“Tarrified”
Taking your money out now would most likely be a bad idea.
First, you get hit with tax penalties. Those are big, so even if you’re anticipating additional future losses, you have to weigh that against sizeable penalties now.
Second, you don’t know how low things will go or when they’ll recover. If you take your money out during a dip, and then the market is up by 10% compared to where it is now by the time you feel comfortable putting it back in again, then no matter how much of a roller-coaster things were between now and when you put your money back you you’ll have lost 10%.
If you’re anxious, you should look at ways you can reduce your expenses and set aside money in an emergency fund outside of your retirement accounts if you can. However, you should basically view money that already went into retirement accounts as money that you just don’t have anymore.
Like, if you lose your job and you can’t cover your mortgage and it looks like the only way to meet your obligations is by taking money out of your retirement account—don’t take money out of your retirement account. Most retirement accounts are protected in bankruptcy proceedings, so if you really find yourself in a worst-case scenario and headed towards bankruptcy, it’s still not worth burning through a protected asset to buy yourself a few more months of anxiously watching your money disappear.
Cashing out your 401K would be a disaster. In 2008, people took hits to their 401Ks, but they rebounded.
The stock market is a long game. You could always meet with your 401K advisor and discuss if you need to make any changes to your investing strategy but otherwise do nothing.
I just wanna say that “tariffied” is a beautiful turn of phrase
Do as you wish. Always a good idea to diversify.
I worked with a guy who was in his early 60s and not able to retire – because a few years prior to that, in 2008, he went with the “sky is falling” crowd and cashed out his entire retirement saving portfolio. Not only did he get hit with tax penalties, he lost over 80% of his life savings, because he sold when the market hit rock bottom. So yeah, my point is cashing out your retirement accounts is probably the dumbest thing you could do right now. Unless you are actively managing your 401k investments, don’t even look at the account if it’s only going to stress you out. It’s probably invested in an age-target fund anyway (that’s what most companies tend to do), so just leave it alone.
Don’t cash out…. You can never time the market and as long as you don’t plan to retire in 5 years you should be fine. The market will market (unless it doesn’t).
I mean look at the covid years… The market did some crazy stuff.
If you are really worried, you can start allocating more to fixed income.
The only guarantee is that things will change. No one knows the rest of the details. Personally I would sit on it because those fucking rich people are buying up shares for pennies. If they know it’ll rebound we may as well trust them.
Sit tight. This too will pass.
don’t be dumb. sit on your money and continue what you’ve been doing.
You still have 25 year until retirement — the worst thing you could do is panic and pull money out of 401k. Keep investing, you’ll get more shares for your same contribution when prices are down, and in the long run you’ll be OK.
The real answer is nobody knows where it goes from here. Traditional financial advice will not save all of the people confidently telling you it will just go back up “like it always does”.
Transfer your 401k into a rollover IRA. No harm no foul.
Before anything, I’m not a financial advisor, and do not have any financial background. I would highly suggest you talk to an actual financial advisor to make up your mine vs asking Randoms on reddit however here is my 2 cents…
Keep your money in your 401k since your only 40 years old. It’s going to drop a good bit, but when it’s down, you will be buying shares at a much cheaper rate which will then balloon up when the economy eventually gets back on track. It may take a few years to get back on track.
It’s buy low sell high, not buy all your life sell low
Rest assured your 401k should be fine……..
On the other hand, retired folks like me are absolutely fucked!
Look up a 100 year graph of the stock market and then hold
Typically the market recovers within 6 months to 2 years.
There’s not much you should do besides make sure your asset allocation is appropriate for your age / expected retirement date.
Let’s put it this way: if your 401k loses so much value that you’d have been better off having it in cash, then we’ve got bigger problems to worry about.