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Dave’s Inbox: Should I stop contributing to retirement during the bear market?

I keep track of the many questions I receive from client families about their financial pictures, and I wanted to address two of those questions that have come up quite a bit recently regarding retirement accounts in a down market.

They boil down to some version of this: 

“I’m over 59 ½ and planning to retire in the next five years, but my 401(k) hasn’t been performing well since November of 2021. Should I begin taking withdrawals now before it drops any lower?”


“Should I stop contributing to my 401(k) during this market downturn? It feels like I’m just throwing money into a black hole.”

These questions have made me realize that the average investor really does feel like they are turning dollars into cents during the current bear market that we’ve endured over the past several months. I get that uneasiness — we are feeling the pressure of assets needing to perform well for us, especially as we near retirement. No one, myself included, likes seeing their accounts lose value during systematic market declines.

But as I wrote recently, there tends to be a prevailing sense that a market in a downward motion will remain in a downward motion, and that’s historically just not true. Many books out there show how, just as our economy continuously expands and contracts, the market of stocks and bonds also goes up and down in value.  Just because the market has declined over this bear market, it certainly doesn’t mean that over the next five years, it will continue to go down. It is important to remember that past performance is no guarantee of future results. 

History has shown that the average bear market lasts 388 days. We officially entered a bear market on June 13, 2022, which, at the time of this writing, was 226 days ago. Who’s to say we aren’t on the verge of coming out of this thing? Now I can’t make any guarantees — my crystal ball for picking highs and lows is broken, and so is the one of all the so-called “experts” out there. However, I can say that now is not the time to make an investment decision and withdraw valuable retirement funds based on your emotions from the past few months. 

This is even more true for your contributions. Remember — when you invest in your 401(k), you’re not just funneling money into a bank account that rises and falls. You are buying shares of actual companies that are working every day to earn profits and raise the value of those shares. Those shares are real assets, and guess what? 

Those assets are currently on sale. 

For some reason, the stock market is the one thing that most people don’t want to buy while it’s on sale. But you can buy fractions of many company stocks for a relative discount right now! Those companies are working hard to be successful for their futures, and your stock portfolios follow their corporate earnings. What better move can you consider right now than maintaining, or even increasing, your 401(k) contributions while those shares have dipped in price? 

For you young folks out there, even an extra $100 per month can make a big difference in your financial trajectory 20, 30, 40 years down the road.

For the empty nesters, you may have funded a 401(k) for many years and just put in whatever the company would match. Now that your children have moved out, you may have extra cash flow that you could defer to your retirement plan. 

This is a great time for you to have a conversation with us and talk about what you could do to maximize your retirement contributions while the market is on sale. Why don’t you contact us today so we can review your current goals and see how we can take advantage of this opportunity?

Article by David Smyth, Senior Partner at Family Financial Partners — a financial services firm in Lexington, Kentucky.

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