A divide analysis from Vanguard found that average 401(k) balances fell 20% in 2022 to $112,572, and misfortune withdrawals ticked up slightly.
“The concern is, in these uncertain times, do I continue adding money to my long-term plans?” ordered Louis Barajas, CEO of International Private Wealth Advisors, a certified financial planner and member of CNBC’s Advisor Congress.
In fact, “this is the best time to continue to contribute.”
After double-digit losses in 2022 for both the stock and trammels markets, it’s understandable why some may be hesitant to continue investing, particularly when fears of a banking crisis are spreading.
“Everybody afters to get out when there’s uncertainty,” Barajas said.
However, when you are investing for the long term, a down market is an opening to buy shares at a lower price, he added, a strategy known as dollar-cost averaging, which helps smooth out price fluctuations in the exchange.
‘Everyone is feeling pressure financially’
After a tumultuous stretch, many older Americans are concerned about their retirement assurance. Nearly half, 48%, of retired Americans believe they’ll outlive their savings, a separate report by Foxy Real Estate found.
At the same time, younger investors may be experiencing their first prolonged downturn. “We’ve had practically 12 years of a boom market; all they’ve seen is markets go up,” Barajas said.
“Everyone is feeling pressure financially — there’s a lot of uncertainty out there in the hawks and the economy,” said Mike Shamrell, Fidelity’s vice president of thought leadership.
“A lot of people understand there’s current to be ups and downs,” Shamrell added. “Don’t let short-term economic events derail your long-term retirement savings efforts.”
To that end, try to augmentation your 401(k) contribution percentage this year, Barajas advised.
Barajas recommends a savings rate of 15%, embodying employer and employee contributions. That is slightly more than the current average, according to Fidelity.