When Not to Invest in Your 401(k)

Basic creditcard / debitcard / smartcard graph...
Image via Wikipedia
Controlling debt must always be a top priority if you plan to retire comfortably. This along with regular contributions to your 401(k) must be part of your long term financial strategy.

Just because there is threat of a recession, the stock market is gyrating, and the U.S. is being lambasted with negative press across the globe concerning our national debt does not mean it is a good time to back off your retirement savings.  In fact, it could be the worst time.  We heard these concerns loud and clear in 2008 when the market dropped nearly 40%.  Employees calling into our financial helpline asked our financial planners in frustration, “Why should I invest in my retirement plan when I am losing money every single day?”  First-time investors stopped their contributions because they saw their statements and it appeared their contributions were simply disappearing.  It turns out those investors who held firm to their long-term strategy of investingeach month regardless of the current market were able to reap the benefits of the rebound.

There are, however, legitimate times when not investing in the 401(k) may be the best financial strategy—not because the market is down, but because there is another urgent competing priority that, unless handled, would damage the ability to retire.  Employees who say they are not on track to retire tell us that retirement planning is their top financial priority followed closely by getting out of debt.   Unless addressed, high interest credit card and consumer debt can derail attempts to reach retirement goals.

Your retirement plan, including your 401(k), must have a long term strategy and focus to succeed. Discipline and this long term strategy will allow you to reap the rewards of a successful retirement.

Please comment or call to discuss how this affects you and your employees.

  • How to Manage Your 401(k) Through Market Down Swings (401kplanadvisors.com)
  • Pay To Play In 401(k)? Pimco, Dodge & Cox, American Funds Eyed (401kplanadvisors.com)
  • Bipartisan Support in Washington for 401k Skimming (401kplanadvisors.com)
Enhanced by Zemanta

Leave a Reply

Your email address will not be published.