Home Personal Finance It’s the ‘best time’ to contribute to a retirement plan, says advisor

It’s the ‘best time’ to contribute to a retirement plan, says advisor

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  • Following an already bad year, retirement 401(k) account balances have taken a big hit, but this is the perfect time to invest, says one expert.
  • A bear market is ideal for dollar cost averaging, according to CNBC Advisor Council member Luis Barajas.

another Analysis from Vanguard We also found that average 401(k) balances dropped 20% to $112,572 in 2022, with a slight increase in difficult withdrawals.

“The concern is whether we will continue to add money to our long-term plans in these uncertain times,” said Louis Barajas, CEO of International Private Wealth Advisors, certified financial planner and member of CNBC’s Advisor Council. He said:

In fact, “this is the best time to continue contributing”.

Learn more about Ask an Advisor

Here are the FA Council’s views on how to navigate this economy while building wealth.

After double-digit losses in both the stock and bond markets in 2022, it’s understandable why some are hesitant to continue investing, especially when fears of a banking crisis are widespread.

“When there is uncertainty, everyone wants to escape,” Barajas said.

But if you’re a long-term investor, a falling market is an opportunity to buy stocks at a lower price, he added. Dollar cost averaging helps smooth price movements in the market.

After a tumultuous stretch, many older Americans worry about retirement security. Another report found that nearly half of retired Americans, 48%, believe they will outlive their savings. smart real estate found.

At the same time, young investors may be experiencing their first prolonged recession. “We had the market booming for almost 12 years. All they saw was the market going up,” says Barajas.

Mike Shamrel, Vice President of Thought Leadership at Fidelity, said:

“A lot of people understand that there are ups and downs,” Shamrel added. “Don’t let short-term economic events thwart your long-term retirement savings efforts.”

To that end, try to increase your 401(k) contribution rate this year, Barajas advised.

Barajas recommends a 15% savings rate that includes employer and employee contributions. According to Fidelity, this is slightly above the current average.

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