Stop Checking Your 401k so Much
Now more than ever, heed this advice: stop looking at your 401k like that. When there is disturbing news about the stock market (see: all the latest economic news at the moment), you may feel compelled to obsess over how your retirement savings are doing, but don’t, even if the balance is clearly on the page. panel of your banking application. Just ignore it. That’s why.
Your 401(k) for later
Jim Keenhan, Senior Consultant, AFS 401(k) Retirement Services, LLC, has been a financial advisor for many years. He advises you to stop thinking of your 401(k) as money in the bank. Instead, “think of it as a way to secure a paycheck after you retire,” he says. You stop working, your paychecks stop coming in, and you can count on the money you planned to save with your employer. It’s money for later. What the balance sheet looks like right now doesn’t matter if you’re not currently at or very close to retirement age.
It’s hard to remember when you know that a drop in the stock market means a drop in your balance sheet. It’s natural to want to rush to check the extent of the damage again and again, especially in times of economic turmoil. But this, according to Kinehan, is only to your detriment.
“It can be funny when the stock market is doing well and your investments are doing well,” he admits. “However, the stock market doesn’t always go up.” And whether it’s up or down, you’re in it for the long haul.
How often should you check your 401k?
Kinhan said there are other reasons you might want to check your 401k besides looking for the thrill of increasing your balance or waiting for it to drop, such as changing the size of your deposit or updating your beneficiary.
Everything is fine. Otherwise? Do it annually, he says. In fact, to the best of your ability, only change things annually, and do so with the help of a financial advisor if you can.
What can you do to feel better and stop checking your 401k?
Kinhan warns against driving yourself crazy by focusing on everyday balance. Instead, take back some control by looking at the big picture of your finances. Find a financial advisor or contact your employer to see if they offer access to someone who can answer your questions. (If they offer a 401k plan, they should.)
“Sit down with a trusted financial advisor. Trustee is a key word because it means that the financial advisor will act in that person’s best interests,” he says. “A lot of times people read the headlines about a stock market crash — it really is meant to be shocking. They are trying to get people to click on links and want their eyes to be on the screen. This is not intended to be advice anyone should follow in their retirement accounts.”
Simply put, don’t make financial decisions based on an article, a tweet, or a hunch. Sit down with an advisor who has the knowledge and experience to understand market fluctuations and who can guide you a little more calmly. Do this once a year. Otherwise, stop logging in.