Can clients protect 401(k)s from a coronavirus-driven market downturn?
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Can clients protect their 401(k) from a coronavirus-driven market downturn?
Workers can protect their 401(k) assets from stock market volatility by staying calm and keeping their savings in the account, according to this MarketWatch article. They are also advised to hold cash reserves outside the account to cover emergency expenses and avoid early withdrawals. “Find ways to generate income,” says Jake Northrup, founder and a financial planner at Experience Your Wealth in Bristol, Rhode Island. “The ability to turn up and down your income is such a powerful planning tool to protect against down markets.”
What should clients do if they retire in a bear market?
The bucket strategy is one of the approaches that seniors can use when they stop working during a stock market downturn, writes a Forbes contributor. This strategy requires investors to spread their assets across tax-deferred, tax-free, taxable accounts and this can be challenging, he writes. "Ideally you may want to align your investments in the right type of account to derive the greatest tax benefit."
Why wait for Social Security?
Although there is no one size fits all strategy for claiming Social Security benefits, seniors will be better off delaying their retirement benefits until the age of 70, says an expert in this Morningstar article. "Because every year that you delay you get a big bump up in your monthly or annual benefit," he says. "So, for households that have a concern about boosting the amount of guaranteed income coming in, this is definitely the best way to do that."
Dos and don'ts to avoid clients’ 401(k) panic
401(k) investors are advised to take proactive steps to avoid panic amid the stock market correction, according to this article in CNBC. Young clients are advised to adopt a more aggressive approach to investing while those who are a few years away from retirement should maintain a more conservative portfolio. 401(k) participants are also advised to assess their contribution rate and avoid timing the market. “Don’t rush to make decisions. Contact your financial advisor and have a conversation about the markets and your financial goals," says Zaneilia Harris, CFP and president of Harris & Harris Wealth Management Group in Upper Marlboro, Maryland.