Anyone made changes to their retirement accounts?

[Pea-n-Me]

In light of their decreasing value during these tough economic times?

This question is inspired by someone I know who withdrew all of their money out of their IRAs and put it in the bank, saying they wouldn’t make money that way, but at least they wouldn’t lose it, either. (Obviously this person is of retirement age so no penalties.)

I know that if everyone did that, it wouldn’t be good for the economy, and that it’s generally not recommended, with the idea being that leaving it there, it will eventually come up again, as has happened in the past. But the way things are going, I seriously wonder whether their value will actually come up again, and if so, when? We’re at that funny age where retirement isn’t too far off, so I don’t know how much time we have to wait. I am reading that people are now starting to put off their retirement because of these losses.

So, financial people, what say you?

 

[Pea-n-Me]

Btw, doing my part. And going for something maybe a little different.

 

[momz]

I am not a financial person. So, I am NOT giving advice. I am in my early 50's to give some perspective. I have moved 30% of my holdings to cash. But otherwise will ride it out. In addition, I am contributing 12% of my income along with a 6% match. So I'm continuing to invest and hope that buying low will offset the losses over time.

Edit: my kids' college savings has been decimated at exactly the time we need it. so that has created some stress.

 

[Pea-n-Me]

I am not a financial person.

Nor am I.

 

[RedAngie]

We have an advisor. She moved some of our holdings to more stable investments.

 

[LoveSpringsteen]

I’m not making any changes, except that my company was recently sold and my 401k balance was transferred to the new plan. It couldn’t have been worse timing since I had lost quite a bit this year, but it is what it is. I’ll keep my 401k contribution the same. The upside is the new company has a more generous 401k match, so I’ll have more opportunity to recoup my losses this year. I have less than 10 years before retirement and am currently in a managed fund based on my retirement age.

Edited to add; when the 2008 market crash happened, at that time, I lost about 40% of my 401k value. It took a couple of years, but I regained those losses and I actually increased my contributions at that time, but I was younger then and had a longer time before retirement.

 

[Ms.Minnie]

I recently moved some of my cash to I-bonds that for the next six months are paying a much higher rate of interest, close to 10%. They are based on the rate of inflation. There are rules that you have to adhere to and there is a limit of how much each person can invest.

 

[TippyThomas]

No I haven't.

 

[tinatark]

The company I worked for was sold in the last quarter of last year. My 401K was moved into a traditional IRA in January of this year. It has earned .000245 this year. I call that a win!

 

[mefordis]

In light of their decreasing value during these tough economic times?

This question is inspired by someone I know who withdrew all of their money out of their IRAs and put it in the bank, saying they wouldn’t make money that way, but at least they wouldn’t lose it, either. (Obviously this person is of retirement age so no penalties.)

I know that if everyone did that, it wouldn’t be good for the economy, and that it’s generally not recommended, with the idea being that leaving it there, it will eventually come up again, as has happened in the past. But the way things are going, I seriously wonder whether their value will actually come up again, and if so, when? We’re at that funny age where retirement isn’t too far off, so I don’t know how much time we have to wait. I am reading that people are now starting to put off their retirement because of these losses.

So, financial people, what say you?

If I needed the money in 5 years I'd take it out. My in laws lost 25% of their college account for their grandchildren by leaving it in the market and now one of their grandchildren is ready to go to college and they now want to leave it there to recoup their loss.

 

[Dan Murphy]

someone I know who withdrew all of their money out of their IRAs and put it in the bank, saying they wouldn’t make money that way, but at least they wouldn’t lose it, either. (Obviously this person is of retirement age so no penalties.)

Hopefully s/he did not actually take it out of the IRA 'wrapper', thinking that would prevent lose. It's not the financial tool that dictated transitory paper gains and reversals, but rather the actual investment/s Taking out of the IRA will trigger ordinary income tax consequence on the amount removed. Not good. Possible moving to a money market or similar within the IRA wrapper would have provided an equal sleep attitude without the taxes/

my company was recently sold and my 401k balance was transferred to the new plan. It couldn’t have been worse timing since I had lost quite a bit this year,

The transfer from one plan to another, similar investment positions, would not create gains or reversals on their own. It would be a lateral move.

spelling​

 

[kdonnel]

Not due to retire for a couple decades.

 

[disneychrista]

About every 6 months or so, I review my distribution and change what my contributions are going to based on performance.

 

[TraderStitch]

Best you can do it leave your money where it is and keep contributing to your retirement plan. Right now the market is on sale. Sure things might still go down a bit, but compared to where prices were a year ago, you'd be hard pressed to find such good deals. Everything is cyclical and things will bounce back. Nothing is 100% guaranteed for a good return and I'm not a financial advisor, but I do a good amount of financial studying.

I also have a ways to go before retirement so I still have sometime to wait for markets to bounce back. If you are older and within 10 years of retirement, you should have already moved a decent portion over to bonds and more conservative investments anyway.

Tune out the talking heads on TV that complain about the sky is fall. Stay the course and keep investing in your future.

 

[LoveSpringsteen]

Hopefully s/he did not actually take it out of the IRA 'wrapper', thinking that would prevent lose. It's not the financial tool that dictated transitory paper gains and reversals, but rather the actual investment/s Taking out of the IRA will trigger ordinary income tax consequence on the amount removed. Not good. Possible moving to a money market or similar within the IRA wrapper would have provided an equal sleep attitude without the taxes/

The transfer rom one plan to another, similar investment positions, would not would neither create gains or reversals on their own. It would be a lateral move.

But only the money in the account transferred and not the shares I owned in the prior account. Essentially locking in the losses I saw this year. At least that is how I understand it.

 

[Disneefun]

No changes, and we're +/- three years from retirement. (That would be an "early" retirement, though, so if things aren't better by then, we could put it off longer.) Right now I'm just continuing to invest every paycheck and month as I always have. Some extra cash is going in, as well, in bits and pieces. Dollar cost average on the way down and then on the way back up.

This isn't my first recession rodeo, though. Been investing since the first Bush's economic plotz, so I'm used to down markets and have developed a strong stomach. I'll do what I've always done and keep going. It's worked so far and I figure if the poop really hits the fan and the market completely tanks or never recovers, then a) I'm still better off than many and b) there will be a heap pile bigger of things to worry about.

 

[Dan Murphy]

But only the money in the account transferred and not the shares I owned in the prior account. Essentially locking in the losses I saw this year. At least that is how I understand it.

I`'ll try to lay it out here.

You were working for company A, invested in it's 401(k). For illustration, you were in a large cap growth fund, let's call it fund 1. While working for A recently, your 401(k) went down in value (didn't lose, just down) from $10,000 to $7,000.

A sells company to company B, along with transferring the 401(k). Most transfers like that are transferred on a mapped basis. If you were in a large cap growth fund with A, you would be mapped into the large cap growth fund with B. Not the identical fund (maybe, but likely not). Your $7,000 current value is now in B's large cap growth fund.

Don't concern yourself with number of shares or share price. Item of focus is that the amount you had in A's plan is now in B's plan, essentially the same asset class you were in. In the months ahead, if your account with A would have increased to $8K, so will B's, very close, maybe a hair more or less. If the fund you had with A would have decreased from $7K to $6K, so will your fund with B, give or take.

Does that make sense?

 

[LoveSpringsteen]

I`'ll try to lay it out here.

You were working for company A, invested in it's 401(k). For illustration, you were in a large cap growth fund, let's call it fund 1. While working for A recently, your 401(k) went down in value (didn't lose, just down) from $10,000 to $7,000.

A sells company to company B, along with transferring the 401(k). Most transfers like that are transferred on a mapped basis. If you were in a large cap growth fund with A, you would be mapped into the large cap growth fund with B. Not the identical fund (maybe, but likely not). Your $7,000 current value is now in B's large cap growth fund.

Don't concern yourself with number of shares or share price. Item of focus is that the amount you had in A's plan is now in B's plan, essentially the same asset class you were in. In the months ahead, if your account with A would have increased to $8K, so will B's, very close, maybe a hair more or less. If the fund you had with A would have decreased from $7K to $6K, so will your fund with B, give or take.

Does that make sense?

Yes. Thank you for the information. My belief, per a former boss of mine, was that even though my 401k had lost 15-20% value this year, that I still owned the same number of shares. He told me he ups his contribution in a down market to buy those cheap shares and if you move your money in a down market, you’re locking in your losses. From what you’ve explained, that’s not really the case.

 

[loves to dive]

My company closed our 401K account a few years ago, I moved 90% of mine to an annuity, which matures when I'm 70 (5 years from now). I might not make as much money as I could have but I won't loose any and I'm guaranteed a certain amount if I leave it in until it matures.

 

[Dan Murphy]

if you move your money in a down market, you’re locking in your losses.

If you moved money from an investment account (stocks, funds, etc.) to a money market or cash account out of fear (or for any reason), then yes, you are locking in your losses from a temporary downturn. Moving from one fund to another similar fund, no, you are not locking in downturns.