What Should I Do With My 401K Right Now?

By John Otis

May 18, 2021

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Don’t know what to do with your 401(k), or if you should do anything at all? Don’t worry, because there are millions of people in the same situation as you.

With the economy feeling more precarious than ever, nobody in the right mind would want to take chances on something as important as their financial future.

You can’t control which direction the economy goes in, of course. However, you can control what you do with your money, especially when it concerns your retirement.

Even as things go back to normal, relatively speaking, you shouldn’t fall into complacency regarding your 401(k).

We don’t have an answer right here, but we have a very pertinent story to read about where irrational thinking and poor planning could do for your 401(k) and overall financial confidence.

A Cautionary Tale: The Dangers of Acting on Fear

Consider the following story.

Jim had a well-paying job with a healthy 401(k). However, the 2008 market decline happened, and Jim saw his 401(k) depleted by 37 percent.

This sent Jim into a panic, and rather than letting the market recover, Jim liquidated his IRA and transferred his 401(k) to a mutual fund he thought would do better.

As the market kept declining, Jim figured he had done all he needed to. He basically acted like his 401(k) didn’t exist.

However, he was missing out on a sturdy market recovery.

Although 2007 to early 2009 were rough, there was a remarkable surge from the Dow Jones.

Unfortunately, Jim’s bond investments meant that the market comeback didn’t do much to help him. As it kept doing well, he was left ruing his rash decision-making. He could do nothing to change the past, but he obsessed over how things could’ve gone for him.

Jim isn’t a person. Jim is many people, and he could be you if you’re not careful. We still don’t know the true impact of the pandemic quite yet, and anyone who says they do is lying.

However, we do know that panic can lead to some unwise decisions. It’s understandable if you feel a little nervous about things right now, but please stop and think before committing to anything.

There are numerous options for things you can do with your 401(k). We’re going to run them down, detailing the good and bad about them each.

Maintain Limits for Contributions

Are you already putting money in your 401(k) each week? Keep doing that and watch it grow over time.

You might fear another market decline, but it’s good to know that you’re only theoretically losing money. No actual losses would take place until a sale.

With more contributions, you’ll see more returns from your much-anticipated retirement. You don’t need to monitor the market to make your decisions. Whatever is happening with the economy, you’re taking care of yourself.

From 401(k) Maneuver, Mark Sorenson urges investors to purchase more shares during periods of market decline and fewer when the market is in an upswing. He says this can help you accumulate wealth over time.

He also says that the market always returns to normal. Therefore, any change should be recognized as temporary, even if that doesn’t seem possible at the time.

It’s just like the weather. It’s hard to think of the sunshine when there’s a hurricane outside, but the winds will calm, the clouds will part, and you’ll be safe.

Hold Off on Contribution Deferrals

If your budget is restricted or your spouse is unemployed, don’t think that you should stop adding to your 401(k).

Perhaps you’ll have to scale back your contributions a bit. That’s totally normal, but it doesn’t mean you have to bring your progress to a complete halt.

Let’s say you were contributing 20 percent of your paycheck each week. Now, you can try to put in 15 or even 10 percent until things stabilize.

You should also be careful about what you do with the money that you’re not putting in your 401(k). If you don’t have any solid plan for it, chances are it’s going to go to waste

The money you’re not using on your 401(k) should go to another meaningful purpose. Don’t see this as some “mad money” that you have a license to spend with total abandon. We can’t control what you do with your money, but we do hope we can be an excellent financial influence on you.

Consider Adding More to Your 401(k), If Possible

Have you recently received a raise or seen some fortune via the stock market? Use this to your future advantage, and put it in your 401(k).

Spending habits have changed significantly with the pandemic, and you’ve probably saved a lot more than you realized.

If you can up your 401(k) contributions by even single percentages, you can make a significant change for the better. This could be money that you were previously spending on frivolous things that you ultimately didn’t need to.

There’s a time and place for everything, after all. And sometimes, it’s better to reward yourself in the future.

Turn Your 401(k) into This Shiny Metal

Investing in precious metals like gold is a great way to plan for retirement. This is especially important now, as many people see how good gold is compared to the dollar in terms of stability.

Some 75 percent of all of the money ever printed in the United States was printed last year. This is amazing, and extremely worrying, as massive inflation (even hyperinflation like in Venezuela and Zimbabwe) could happen at an unforeseen rate. Essentially, those dollars could be worth next to nothing.

However, you don’t have to fall into despair since you have alternatives. Gold is a trusted historical store of value, and you can make a gold IRA out of your 401(k) by rolling it over. There are many advantages to doing this.

For one, gold isn’t connected to stocks and tends to rise when the dollar and other paper assets fall. If inflation is happening, gold can be your best friend.

This isn’t anything particularly radical, either. Gold has been around well before the United States was. It acts as an excellent shield for your portfolio, and you can really see the benefits as retirement approaches. The last thing you want when you are preparing for life after work, is to worry about your dollars being worth nothing and having to go back.

Even if you’re decades away from retirement, putting a percentage of your portfolio in gold is a good idea, according to almost every economist and financial advisor today.

But if retirement is on the horizon, protecting your purchasing power is essential, and you can do this by rolling your 401(k) into a gold IRA. Just like gold, your retirement savings are precious.

Final Thoughts

Your situation will be different than others and must be customized to your work timeline, risk tolerance, and the current political and economic climate. Consider your options, and consult with a financial planner if you need more help.

If you’ve retired, retirement is on the horizon, or you're just concerned about inflation, you should really consider learning about rolling over a 401(k) and starting a gold IRA. The best 3 companies to help you learn about this are below. 

You can request a free gold investing guide by visiting their sites. Best of luck!

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John Otis

About the author - John Otis

In the modern age of reckless government spending and central bank money printing, my sole objective is to help others protect their savings, retirement, livelihoods, and purchasing power from currency devaluation. Otis Gold has been featured in Financial Times, Yahoo Finance, Kitco News, Motley Fool, Seeking Alpha, and more. If you have any questions or comments, leave them below. Welcome!

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