Title: Frequent 401(k) Check-ups: Are You Overdoing It?
It's that time of year again, folks! New calendar, fresh start, and an excellent opportunity to reassess your retirement savings. However, remember, balance isn't everything.-You might be the type to constantly check your retirement accounts, anxious about every little piece of financial news. But, trust me, it's best to keep a gap from your 401k.
Whenever the news titillates with stock market fears or inflation worries, or unemployment rumblings, it's understandable to be consumed by your retirement savings' welfare. Yet, even when the numbers are brazenly displayed on your banking app's dashboard, ignore them. Here's why.
Your 401k is for a rainy day, literally
Jim Keenehan, a seasoned consultant with AFS 401k Retirement Services, shares some wisdom. He encourages you to stop viewing your 401k as an invisible piggy bank. Instead, think of it as a cushion for your golden years. You retire, paychecks cease, and your 401k ensures a steady income flow until your old age. It's "rainy day" money, essentially. The balance's current state holds little relevance unless you're nearing retirement.
That's a hard truth to swallow when market dips translate into swings in your account balances. But allowing yourself to be swayed by the market's ups and downs is more detrimental than helpful, says Keenehan. Although it may seem exhilarating to watch your investments grow during market booms, remember, not all market conditions are favorable.
How often should you crunch 401k numbers?
Keenehan suggests change-driven reasons behind frequent 401k checks: adjusting your contribution rate or updating your beneficiary. Those are valid reasons to be nosey, but beyond that, try to distance yourself.
If you need to assign your investments or make changes based on life events, go for it. But after that, do your best to forget about it, unless financial landscape shifts require alterations.
Annually is often enough. In fact, try to stray from regular tinkering as much as possible. When life's circumstances require adjustments, do so with the guidance of a financial advisor, if possible.
How to quench your 401k curiosity?
Keenehan advises against mindlessly scrutinizing your daily balance. Instead, shift focus to your long-term financial goals. Consider consulting a financial advisor or contacting your employer to access one. Employers providing 401k plans should have advisors available for assistance.
"Sit down with a fiduciary financial advisor," says Keenehan. "Fiduciary" translates to someone who puts your interests above theirs, providing unbiased guidance. Don't trust market headlines or social media posts for investment advice. Instead, engage with a professional who is qualified to guide you through fluctuating markets.
In simple terms, avoid acting on sentiments based on headlines or social media rumors. Instead, work with an advisor who understands and can navigate financial terrain, providing a more soothing journey through the market's twists and turns. Annually is sufficient to revisit this process. Until then, steer clear of logging in.
Despite the urge to frequently check your 401k balance due to market fluctuations or financial news, it's recommended to only do so when there are change-driven reasons, such as adjusting your contribution rate or updating your beneficiary. Regularly checking your account might not be beneficial and could potentially lead to unnecessary anxiety. Instead, focus on your long-term financial goals and consider consulting a financial advisor for guidance.
In light of how often to check your 401k, it's important to remember that your 401k is essentially your 'rainy day' fund for retirement. Regardless of market conditions, it's crucial to maintain a balanced approach and resist the urge to constantly monitor the account for short-term gains or losses.
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