Remain Calm When the Markets Aren't

Three tips to consider when thinking about your retirement savings in volatile markets.

Key Points
Focus on the reason you chose to participate in your retirement plan in the first place: to build financial security for your retirement.
Keep your focus on your long-term goals by continuing to contribute to your retirement plan.
If you have an asset allocation that is appropriate and prudent based on your age, risk tolerance and/or your expected retirement date, then it is generally best to stay the course.
Watching the recent stock market tumble has been nothing short of nerve-wracking. Like many people, you may be wondering what you should do. Before you make a decision that could have a far-reaching impact on your future plans, ask yourself these three questions:
1. Should I protect my savings by taking a withdrawal from my retirement plan?
It's understandable to feel anxious and concerned when the stock market drops, but don't let your emotions drive your financial decisions. If you pull money out of your plan, you'll likely lock in any losses you may have. And, if you're under age 59½, you'll owe ordinary income taxes and get hit with a 10% early withdrawal penalty unless you are considered a "qualified individual" as defined by the CARES Act. In that case, you may be eligible for a waiver of the penalty and an extension of time in which to pay the ordinary income tax on a withdrawal.* But you'll still miss out on the chance to rebuild your savings when the market rebounds, as it has, historically. Similarly, for example, if you move money from your affected funds to the Interest Accumulation Account, you won't benefit when those affected funds rebound.
Key takeaway: Focus on the reason you chose to participate in your retirement plan in the first place: to build financial security for your retirement. Review your long-term goals and how you plan to achieve them. Your Mutual of America representative can provide you with information about your retirement plan investment options that can assist you in ensuring that you stay focused with a solid plan to build for a secure future, even during times of uncertainty.
2. Should I stop contributing to my retirement plan?
It can be unsettling when a market tumble leads to a significant drop in your retirement savings. You may feel tempted to stop contributing to your plan. Before you do, keep in mind that trying to avoid bad days in the market can also mean missing out on the chance to benefit from future gains when the market bounces back. Contributing to your retirement plan on a regular basis can reduce risk. The financial term for this approach is dollar-cost-averaging, which means you invest in the financial markets regardless of whether the market is up or down. As a result, when the equity markets are rising, you purchase fewer shares of a fund, but when the market has declined, you are able to purchase more shares. This approach is a consistent way to add to your retirement savings while avoiding trying to time the market. While dollar-cost-averaging can be a helpful tool for lowering risk, investors using dollar-cost-averaging may also forfeit potentially higher returns.
Key takeaway: The stock market historically has trended higher over the long term despite market declines and volatility along the way. Keep your focus on your long-term goals by continuing to contribute to your retirement plan. If you find you need to temporarily reduce your contributions to meet unexpected expenses, consider still contributing enough to take full advantage of your employer match, if available.
3. Should I worry about what the market did today?
One of the best things you can do during turbulent markets is to stay on course, rather than focus on sharp declines in the market over the shorter term, however dramatic they may be. Instead, consider whether market losses have shifted your portfolio away from your intended retirement strategy.
Key takeaway: Nobody can predict when the economy will begin to recover, but you want to make sure to allocate your retirement savings properly to benefit from the market recovery when it happens. If you have an asset allocation that is appropriate and prudent based on your age, risk tolerance and/or your expected retirement date, then it is generally best to stay the course rather than make hasty decisions that may hurt your portfolio's performance over the intermediate or longer term. Please contact your Mutual of America Regional Office or visit our website for more information on topics such as asset allocation and the investment options available to you under your plan.
Past performance is no guarantee of future results.
* If permitted by the plan, the CARES Act permits a participant who is a "qualified individual" to take up to $100,000 as an in-service distribution without penalty, regardless of age. Under the CARES Act, participants taking such distributions may spread the income tax ratably over three years and may repay the distribution to the plan within three years. A "qualified individual" is an individual who (a) has been diagnosed with COVID-19, or (b) has a spouse or dependent who was diagnosed with the virus, or (c) experienced various adverse financial consequences related to the pandemic as set forth in the Act, and any additional factors as may be determined by the Secretary of the Treasury. Please note that this means that if you are eligible for such a withdrawal under the CARES Act, you still must pay ordinary income tax on the withdrawal, but the 10% penalty is waived and the ordinary income tax and repayment may be spread out over three years. Accordingly, participants should also consider alternative options available to them. Please check with your tax adviser or attorney for the latest information with respect to your specific circumstances.

You should consider the investment objectives, risks, and charges and expenses of the variable annuity contract and the underlying investment funds carefully before investing. This and other information is contained in the contract prospectus or brochure and underlying funds prospectuses and summary prospectuses, which can be obtained by calling or visiting mutualofamerica.com. Read them carefully before investing.
Mutual of America's group and individual retirement products are variable annuity contracts and are suitable for long-term investing, particularly for retirement savings. The value of a variable annuity contract will fluctuate depending on the performance of the Separate Account investment options you choose. Upon redemption, you could receive more or less than the principal amount invested. A variable annuity contract provides no additional tax-deferred treatment of benefits beyond the treatment provided to any qualified retirement plan or IRA by applicable tax law. You should consider a variable annuity contract's other features before making a decision.
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