Many who invested in 401(k) accounts as part of their financial planning strategy suddenly saw a drop in their holdings as the coronavirus began to shake the stock market. This pandemic led to the worst 24-hour stock market drop in history on March 16. While the world is still waiting to see what the next turn in the coronavirus crisis will be, you can take steps to protect your 401(k) from any further damage.

How Can You Protect Your 401(k) During the Coronavirus?

1. Avoid Panic

This is easier said than done, but avoid panic. The advantage of a 401(k) program is that it’s an investment strategy. An effective way to remain calm while the market is volatile is to avoid obsessively checking your portfolio. If you and your financial planner have put a solid strategy in place, let it stand.

2. Consider Your Age

If you are younger and have many years of work and investing in front of you, stay the course. History has repeatedly taught us that the market goes through short-term ups and downs but grows over the long-term.  If you are five years or less from your targeted retirement date, you can adjust your financial planning to shift into lower-risk investments that are more likely to provide the cash you need to retire.  

3. Maximize Investment 

You know what they say, what goes down in the stock market will eventually go up. Raising your 401(k) contribution lets you take advantage of lower stock prices now. And if you have an employer match, you are maximizing that investment.

4. Save 401(k) Funds

Besides lowering the amount of money you will have for retirement, taking cash from your 401(k) can also come with early withdrawal penalties. If you are out of options in other areas for cash, ask your administrator if your 401(k) offers a loan program rather than a withdrawal.

5. Seek Advice 

Remember, you are not in this alone. If you are concerned or confused about what the coronavirus pandemic might do to your investments, have a chat with your financial planner. They can give you advice tailored to your unique situation.

If you need a financial planner to help you navigate this unprecedented time, William G. Molitor, CPA in Saint Peters, MO, is here to help answer your questions. The staff there has been helping individuals and businesses in the St. Louis Metro Area since 1990 with accounting and financial planning services. Call them at (636) 926-0502 or visit their website to read more about their services.