Have Faith in Your 401(k)
For those facing retirement, the market crash is a bit
more critical. But don’t fret; all is not lost. If your portfolio has taken a hit, consider delaying your retirement.
Use online retirement calculators, like the one offered
by T. Rowe Price, to help plan your retirement.
And no matter what, continue to match or exceed
your employer’s contribution. Remember: Withdrawing
from your 401(k) early for reasons not approved by the
IRS will be costly. In addition to having to pay income
tax, you’ll be hit with a fee that equals 10 percent of the
amount withdrawn. T. Rowe Price has made it known
that its customers are not in immediate danger.
From the T. Rowe Price web site: “It is important to
note that the position of T. Rowe Price Group in the
financial markets is significantly and fundamentally
different from other more diversified financial
services companies that may be involved in numerous
businesses, such as insurance, lending, investment
banking, and various capital market activities. T. Rowe
Price focuses on one business: investment management
for our clients.”
If you must move your money, consider investing in
Treasury bills. They are extremely safe investments that
don’t yield any interest until they mature.
Ride the Wave
Riding out this tough market may at first seem like a
bad idea, but history has a way of repeating itself. The
market will bounce back. And while the market will
probably get worse before it gets better, it’s important
to remember that if you are investing correctly, you
have time on your side.
Although it’s impossible to time when the market
will improve, some financial experts predict we could
begin seeing improvements in three to four years.
Explore Alternative Saving Methods
It’s true that obtaining a loan will grow increasingly
difficult as the credit market freezes. If you are
saving for your child’s college education or for
a down payment on a home, consider exploring
alternative saving methods.
For starters, look into opening a 529 account. This
college-savings plan allows you to save either at the current tuition inflation rate or at the rate of the market.
If you are thinking of buying a house in the future,
you should still put money into your 401(k), as the IRS
allows you to borrow against it to purchase a home
without a tax penalty, if necessary.
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