I have experienced several bear markets as an ERISA attorney, and it’s never easy, especially with the current volatility due to tariffs.
If you are concerned about the stock markets and your 401(k) plan, you may not need to worry—unless you are nearing retirement. The only time you should be worried about falling stock prices is if you need to withdraw money from your 401(k) right now, either for living expenses in retirement or for emergencies. If you do not need to take money out soon, there is usually no reason to panic.
History has shown that markets can rebound quickly; short-term drops often do not indicate long-term trends. The stock market has encountered many periods of declining prices over time, such as the dot-com bubble of 2000, the events of September 11th, and the subprime mortgage crisis from 2007 to 2010, to name a few. However, overall stock market returns have averaged about 9% from 1994 to 2024, even including these downturns.
So, if you are a baby boomer approaching retirement and your 401(k) has recently taken a hit, try not to panic. Remember the saying: stock markets can go down as well as up. History suggests that, in the long run, it’s wise to work with a trusted financial adviser to strategize about your 401(k) retirement savings, especially during tumultuous times like those we’ve recently experienced in the stock market.
