2022 has gotten off to a tough start for retirement savers.  As of 4-26-2002, the Dow is down 8.53%, the NASDAQ is down 20.16%, and the S&P 500 is down 8.53%. And bonds have also fallen. It has been a tough year to not lose money in your retirement accounts, unless you took no risk at all. These market downturns do happen over time, and you can bet that they will happen in the future. But there are still things you can control that will help boost your income when you do retire.

First, boost your savings now.  Even a percent or two can make a difference. That could be as simple as contacting your plan administrator if you have a 401(k) or 403(b) plan at work. If you don’t have a plan at work, make sure you fund an IRA or start contributing monthly to a brokerage account. While you never know what the future of stock market returns will be, you can control how much you save. And nothing matters more to your final nest-egg than how much you save along the way. When the market falls like it has, it improves the timing of this move.

Second, consolidate your accounts. Do you have multiple former 401(k) plans still out there from past employers, or a scattering of IRAs with several institutions? Consider creating a few main accounts so that you can lower any fees and make the management of your money more streamlined. The first account is an IRA or Rollover IRA at a low-cost brokerage (think Schwab, Fidelity, or Vanguard for instance). These accounts will be there to capture any rollovers from previous employer plans or other IRAs or to fund each year’s IRA. The other account is your plan at work. It is rare that you’ll need more than a few accounts. Even multiple accounts can be with a single provider. An example is to have your Roth IRA and Rollover IRA be at the same brokerage. This suggestion may take a bit more work and time than others, but the payoff is worth it.

Third, increase your funding of Roth accounts. If you are still young and intend on aggressively funding your retirement for many years, then this move will probably pay off. Many employer sponsored plans have Roth options, so that’s an easy way to do it. You can probably do it on-line or you may have to contact your plan administrator. If your income is too high to allow for a Roth IRA contribution, then your employer-sponsored plan may be a great option for you. It’s always difficult to know if a Roth or traditional account will be the best for you. If I could forecast future tax rates or the date of your death, I could give you a precise answer. I believe it’s logical to save some money in traditional and some in Roth accounts. That will give you more flexibility to control your taxes in retirement when you start withdrawing money from your accounts. Remember, with Roth accounts you do not get an upfront tax deduction, but the income will be tax-free once you retire (assuming you follow the rules).

We are living in a time of uncertainty. Consider the war in Ukraine, rising inflation, crazy US politics, and Covid-19 just to name a few. But the moves I’ve discussed above are ones that you have complete control over. And they will help you get to a great retirement. Please contact me if you need help in doing any of these.

Enjoy the journey!