As you move closer to retirement, having a focused picture of what you want your retirement years to look like becomes a priority. Decisions made during this time in your life will have a real, tangible effect on life after work. To get a better idea of the funds you’ll need and how long they will last, please see our Financial Calculators located in the 401K GPS Knowledge Center. If you have the ability to max-out your 401K contributions, we recommend you do just that to take full advantage of the pre-tax, compounding benefits. For more information on the Tax Implications and the power of Compound Interest on your 401K, please visit the Knowledge Center.
At this point in your career, market downturns — like the ones experienced from 2000 through 2002 and 2008 — will have a severe impact on your retirement. Each market correction resulted in nearly a 50% loss on an equity portfolio, which requires a 100% gain to simply return to your pre-bear market balance. We recommend moving to a more balanced portfolio, even for growth-profile investors. The fixed income portion of your portfolio will help offset the market corrections that are sure to happen again over a 15 year period. No longer having an extended time horizon to retirement, you may not be able to make up a significant drawdown in your retirement account.
Stay on Course
Protecting the assets that you have accumulated in your 401K account becomes a focal point during this stage. Another 50% market drawdown, similar to the two already experienced since 2000, could have a severe impact on the quality of life in your retirement years.
With the understanding that markets don’t simply change according to the quarterly calendar year, 401K GPS will send you timely and precise signals when market conditions do change. These emergency intra-quarter alerts will protect your investments by moving you out of the market when necessary, and getting you back in to take advantage of market up-turns.
Of course there is no guarantee that our signals will be correct every time; however, we will make every effort to protect you in down market cycles. We recommend consulting with a tax or financial advisor to obtain appropriate advice regarding your comprehensive retirement, investment, and tax planning.