My 401(k) Is Killing Me, I’ll Never Retire!
Posted on December 20, 2007 |
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It’s getting towards the end of the year so I logged into my 401(k) account at Fidelity to see how it’s doing. It’s not good. My return for the year is real low. Like, I could make more in an ING account low. Will I ever be able to retire? What am I going to do?
Nothing.
That’s right. I’m not going to do anything. A couple of funds had bad years. So what? My 401(k) is meant for my retirement and I still have decades for it to grow. I’m not going to panic over one year. My plan is pretty diverse and it will recover. The funds that did bad - now I get to buy shares of those at a lower price. That’s dollar cost averaging.
Know what else? My company matches 4% on a 5% employee contribution (I contribute 5% for the full company match). That’s automatically an 80% return on my contribution! Oh, throw in the tax savings this year too! When you think of it like that it’s not too shabby. Any losses are with company money (that’s how I’m looking at it).
Could there be considerations that would make me concerned? Yes. If I was close to retirement I would want to make sure my funds aren’t too volatile. Maybe a little more cash and less stock for my funds. If my plan choices weren’t diverse I might also be concerned (I have a mix of small-, mid-, and large-cap funds as well as some international exposure). But as it stands I consider myself doing fine.
When you check your investment accounts make sure you’re not just looking at one performance number. Understand the bigger picture.
What do you think? Am I in trouble or am I doing the right thing not worrying? (Click here to see what I’m invested in).
Let me know!
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Filed Under Investing, Money, retirement
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7 Responses to “My 401(k) Is Killing Me, I’ll Never Retire!”
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- Christina said: We took almost identical steps when we went to one income just over a year ago.
One thing we did, that you didn't mention, is to raise our insurance deductibles on our vehicles. Yes, it's a risk if we're in an accident, but you do tend to drive more cautiously.
You could on What We’re Doing To Adjust To One Income - That One Caveman said: That sounds like the exact same steps we took two years ago as we prepared to go to a single income. I'm so glad we did it and you will be, too! on What We’re Doing To Adjust To One Income
- MeLu said: Do I ever know what you mean, we went to a one family income over a year ago. Our income was cut in half, but our spending did not stop. I've now realized that we are in deep trouble. Lucky I'm old enough to draw social security but that is not enough so I'm on What We’re Doing To Adjust To One Income
- Nicole said: Good for you. It must be a tough change to make but it sounds like you are doing all you can to make it work. on What We’re Doing To Adjust To One Income
- Mercedes said: I saw this earlier but now I can comment now that the kids are in bed. I just wanted to drop by and offer support to both. I was miserable in my job thinking of everything I was missing with my child. And I did miss a lot, now that I have a second on What Is Raising A Child Worth - We’re Going To One Income
- Christina said: We took almost identical steps when we went to one income just over a year ago.
One thing we did, that you didn't mention, is to raise our insurance deductibles on our vehicles. Yes, it's a risk if we're in an accident, but you do tend to drive more cautiously.
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Ah - no, don’t worry about it at all. You’re doing the right things, getting in early, hitting the company match, and doing it regularly. Do you have a post showing what funds you’ve chosen? Thanks for the post back on my side.
Thanks for the comment Hank! Great idea on the funds, I think I’ll follow up with a listing of what I’m investing in. I’d love to hear your thoughts once I post it!
I think you’re fine. I started with a new employer in June, so my 401(k) return is in the negatives. Granted, -0.56% is negligible, but like you, I’d have done better in a savings account. That does not mean I should have stuck the money in a savings account. In the long run, we’re both better off with the 401(k).
@Honest Dollar - Thanks for the comment! Yes, it’s the long run that will win out for us in the end!
When it is going down and you are young, just think of it as a great buying opportunity. It will turn if you are in good funds.
Best Wishes,
Dividends4Life
@4Life - That’s the way I look at it. I have plenty of time and some funds have gotten cheaper to buy.