Latest news with #401k
CBS News
2 hours ago
- Business
- CBS News
Should you roll over your 401(k) to an annuity this August?
Today's uncertain economic environment, dotted by sticky inflation, high interest rates and market volatility, has many pre-retirees rethinking their long-term financial strategy. And, if you're sitting on a sizable 401(k) balance, you might also be wondering whether now is the right time to shift gears. For some, that means converting a portion of their retirement savings into a guaranteed income stream, such as an annuity. After all, predictable monthly income can be a welcome buffer against inflation and market swings. But making a substantial move, like rolling over your 401(k) to an annuity, isn't a good decision for every soon-to-be retiree. Doing so can offer long-term security, but it can also limit your flexibility and tie up your funds in ways that might not align with your goals. This is especially relevant now, as annuity rates have remained high amid the Federal Reserve's extended rate pause, but so have rates on other fixed-income investments, like certificates of deposit (CDs) and Treasury bonds. So, how do you know if this August is the right time to take the plunge and roll over your 401(k) balance to an annuity? Below, we'll take a look at what you need to know before making that move, along with some key considerations that can help you determine if it makes sense for your retirement plan. Find the right annuity to help meet your retirement goals today. Converting a 401(k) into an annuity can make sense in some situations, especially if your primary retirement goal is to secure a steady income that lasts for life. With interest rates still elevated, many types of annuities are offering more attractive payout rates than they have in recent years. That means your rollover dollars could now generate higher monthly income with an annuity than if you made the move in a different climate. And, with stock market volatility remaining a concern in the current economic landscape, some retirees and near-retirees are looking for ways to protect their nest eggs from downturns, which is where fixed annuities, in particular, come in. This type of annuity can provide principal protection and peace of mind, which can be hard to come by if your 401(k) is invested primarily in stocks or mutual funds. That said, rolling over your entire 401(k) into an annuity isn't always the best approach. These unique insurance products tend to come with fees, surrender charges and limited liquidity. Once your money is in an annuity, it's often locked in for years, and getting it out early could cost you. And, if you're still relatively young or want more control over your investments, moving a large portion (or all) of your retirement funds into an annuity may limit your growth potential. If you're still employed, there's also a chance that this isn't an option. Not all 401(k) plans allow rollovers while you're working, so you may need to wait until retirement or a job change before this becomes available. In short, while current conditions may make annuities more appealing than they were in the recent past, a rollover should be part of a broader retirement income strategy, not a standalone solution. Learn more about how an annuity offers you guaranteed income during retirement. If you're considering this type of rollover, start by thinking about your retirement income needs. Ask yourself: Do I have enough in Social Security and other sources to cover my basic expenses? Or would a guaranteed income stream from an annuity help fill the gap? You'll also want to consider your tolerance for market risk. If you're risk-averse and don't want to worry about portfolio performance in retirement, an annuity could offer a helpful safeguard. Some people choose to roll over just part of their 401(k) — generally enough to purchase an annuity that covers their core expenses — while keeping the rest invested for growth or flexibility. Another factor to consider is how close you are to retirement. If you're within five years of retiring, locking in current annuity rates could work in your favor, especially if you anticipate rates dropping again soon. On the other hand, if you're younger, your money may have more earning potential if left in a well-diversified portfolio. You should also evaluate the type of annuity you're considering. Immediate annuities start paying income right away, while deferred annuities build value over time. Fixed annuities offer predictable payouts, while variable annuities carry market exposure and typically higher fees. The right option generally depends on your timeline, risk tolerance and income needs. If you still aren't sure, consider meeting with a trusted financial advisor or retirement planner. These experts can help you crunch the numbers and map out whether rolling your 401(k) into an annuity makes sense for your specific goals. Rolling over your 401(k) into an annuity this August might make sense, especially if you're looking to lock in higher payouts, protect your principal or create guaranteed income for retirement. But doing so is not the right move for everyone, and the timing alone shouldn't drive your decision. So, before making any changes, take a close look at your retirement needs, investment goals and overall financial picture. A partial rollover may offer the best of both worlds — security and flexibility — but every retirement plan is different, and it's important to build a strategy that fits your life, not just the current market.
Forbes
7 hours ago
- Business
- Forbes
Four Reasons Not To Panic About Your Company's 401(k) When Markets Fall
Stuart Robertson is the CEO and President of ShareBuilder 401k, a technology-forward 401(k) provider for small- to mid-sized companies. In the past several months, we have witnessed the stock market go up and down. As a leader, you might be asking, "Should I be concerned about my 401(k), and should I be doing something different during volatile times?" Some of your employees are likely asking the very same thing, whether they have spoken to you about it or not. Here's some perspective that can help answer these questions with a focus on how to think about your 401(k) during a market dip. Why You (And Your Team) Shouldn't Panic Market fluctuations are a normal part of investing. While it's natural for some to feel anxious when their 401(k) loses value with a market drop, it is essential to maintain a long-term perspective. Here's why you shouldn't let market downturns derail your retirement goals and how they may help you and your employees be better off come retirement: Always remember the adage, "buy low and sell high." This means that when the market is down, it may be a better time to invest in the market vs. when it is higher. That's because you can buy more shares at a lower cost when prices are down, which could provide growth opportunities for long-term investors. Unfortunately, when the market declines, some investors panic and sell their shares at a low, only to jump back in when the market recovers. But buying at a higher price can be disastrous to building a nest egg. You can consider setting up automatic investing, also known as "dollar cost averaging," with your 401(k) so you buy more shares when prices are down and fewer when times are good. This can make it easier to stick with your investment strategy and may help improve your returns over the long haul. If you're decades away from retirement, you have ample time to recover from market downturns and build a bigger nest egg. As you approach or reach retirement, you can consider shifting your portfolio to a more conservative approach to experience less volatility and help protect your principal. Remember, you don't lose money unless you sell shares below the price at which you bought. By waiting out a down market, nothing is "lost," and you benefit from not selling at a low price. When you have a decade or more until you might use the money, you have time on your side to recover. A well-diversified portfolio can offer more opportunities for returns while taking on less market risk to help weather market storms. By spreading your investments across different asset classes, you reduce your exposure to any single investment. While some assets may decline in value, others may rise, helping to offset losses. Compounding can turn relatively modest returns into substantial sums over time. The growth of share prices and reinvestment of interest and dividends over decades can be incredibly powerful in growing your nest egg. This is a reassuring fact that underscores the importance of starting to save for retirement early. While a market downturn may be a temporary setback, the power of compounding may outweigh it in the long run, providing a sense of security about your long-term investments. Key Insights For Employers For employers looking to help their employees during turbulent times, it's good to share with your employees, even those nearing retirement age, the value of taking a long-term approach to investing. Markets go up, and markets go down. This has always been the case. Since 1900, U.S. recessions have lasted, on average, less than two years. Over time, the market rebounded, and many Americans who stuck with their long-term investing strategy still had comfortable nest eggs. You may want to adjust your investment strategy if you can't sleep at night, but remind employees that it's generally a bad idea to make a drastic decision, like jumping out of the markets completely, because of a downturn. In addition, ask your 401(k) provider to present to your team on the subject and share added educational resources. With good information in hand, you and your employees can navigate the instability with greater confidence and be in much better shape to help your—and their—golden years be, in fact, golden. Remember, market fluctuations, like changes in the weather, are unpredictable and inevitable. There are no guarantees. Just know that when markets are down, you can buy more at a lower price. As companies grow and economies improve, values increase, which may mean better returns. Try to ingrain: "Buy low and sell high." By understanding investing principles and maintaining a long-term perspective, you can help your employees navigate these challenges and stay on track to achieve your own retirement goals, too. The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation. Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Bloomberg
a day ago
- Business
- Bloomberg
Private Credit Has a ‘Real Place' in 401(k)s, Centerbridge Says
Centerbridge Partners joined the ranks of many alternatives managers that see accessing 401(k) retirement funds as a logical next step for private credit firms. Jeff Aronson, the co-founder and managing principal of Centerbridge, said Wednesday that private credit is a safe investment for 401(k) participants, adding that the most important factor is that investors know what they're buying. New York-based Centerbridge, which managed around $42 billion of assets as of March 31, launched its private credit strategy in 2007.
Yahoo
4 days ago
- Business
- Yahoo
With 11K Baby Boomers Retiring Daily And 401(k) Withdrawals Ramping Up, Are Millennials And Gen X About To Be The Ultimate Bag Holders?
Every day, about 11,000 baby boomers hit retirement age in the U.S., and the wave of 401(k) withdrawals is starting to gain momentum. That has many younger investors wondering: who's left holding the bag? Wealth Transfer Or Wealth Drain? On Reddit's r/stocks, one investor sparked a major debate with this post: 'With ~11k Boomers retiring daily, and the 401k spigot about to go on full blast, can't help but think how this transfer of wealth unfolds.' They raised a concern about whether there will be enough new investment inflows from younger generations to match the outflows from boomers selling off their assets. 'Ultimately, Millennials and Gen X ... could be the remaining bag holders,' the poster suggested. At least, as they say, 'those who were lucky enough to invest meaningfully in 401(k)s and taxable accounts.' Don't Miss: Be part of the breakthrough that could replace plastic as we know it— $100k+ in investable assets? – no cost, no obligation. But not everyone agrees with that framing. 'They've been retiring since 2011,' one person pointed out. 'The stock market has done just fine so far.' Another echoed that sentiment, saying, 'There will always be people retiring. The Baby Boomers started retiring 17 years ago... Why are you so convinced [the market crash] is going to happen now, when nearly all of the Boomers that were capable of retiring already did?' Wealth Inequality And Inheritance Several commenters emphasized that it's not boomers broadly driving the market, it's wealthy boomers. 'Most 401(k) holders ... are also the richest ones,' one person explained. 'The ones being forced to liquidate and sell don't have 401(k)s of a meaningful size. We're fine unless the rich people are screwed.' Trending: This AI-Powered Trading Platform Has 5,000+ Users, 27 Pending Patents, and a $43.97M Valuation — Then there's the question of where that money goes once boomers start drawing it down or pass it on. Some believe it simply recirculates. 'All money comes back to the market one way or another,' one commenter wrote. And inheritance is another piece of the puzzle. 'Who do you think is going to inherit all that wealth?' one investor asked. Others noted that wealthy boomers often advise their kids to stay invested: 'One even told his daughter, never sell this stock, just collect the dividends.' Healthcare, Housing, And The Real Risks But not all that wealth will be passed down. Nursing homes and healthcare costs are taking a bigger bite out of retirement savings than many expect. 'We spent $350K for my mom's nursing home in a 4.5-year period,' one person shared. Another added, 'Boomers are spending that money. You need to find out how to harness it.' The housing market is another looming issue. Some fear that when boomers pass away and their high-value homes hit the market, younger generations won't be able to afford them. 'Mark my words, one day there will be a massive crash in the housing market,' one investor many commenters argued that structural market shifts, not demographic trends, are the real drivers. 'Markets are not the same anymore,' one wrote, pointing to algorithmic trading, tech-driven investing, and persistent foreign inflows. Younger Generations Are Still Investing Despite these worries, younger Americans are investing more than ever. 'Millennials are saving for retirement earlier than any previous generation and Gen Z even earlier,' one person noted. For now, there's no clear consensus on whether millennials and Gen X will get stuck holding the bag. But one Redditor may have put it best: 'This has been a claim made every 10 years or so since 401(k)s have been a thing. I wouldn't worry about it.' Read Next: Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die."UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article With 11K Baby Boomers Retiring Daily And 401(k) Withdrawals Ramping Up, Are Millennials And Gen X About To Be The Ultimate Bag Holders? originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
New York Times
4 days ago
- Business
- New York Times
5 Money Mistakes That Can Make the Road to Retirement Even Longer
For many Americans, their 401(k) balance is a sobering reminder that good intentions don't always lead to good outcomes. Perhaps you planned to increase your retirement savings each year, but instead succumbed to immediate gratification and upgraded to a nicer car each time you were promoted. Or you charged family vacations to your credit card but never fully paid them off. Maybe you diligently funded your retirement account, only to borrow from it to pay for costly home repairs because you didn't have an emergency fund to cover the expenses. The result: Instead of accumulating the recommended six times your annual salary in your retirement fund by age 50, you have less than $100,000 saved and fewer than 20 years to finance what could be a decades-long retirement. If this sounds familiar, you're not alone. Nearly 60 percent of those who are saving worry that they aren't putting aside enough money for retirement, according to a 2024 Bankrate study. And in a 2024 AARP study, about one-quarter of U.S. adults over the age of 50 who are not yet retired said they would never be able to. Despite 73 percent of private sector, state and local government employees having access to an employer-sponsored retirement plan, just 56 percent participate, according to the U.S. Bureau of Labor Statistics. And many people who do sometimes cut back or stop their contributions to offset inflation and unexpected expenses — or when there is uncertainty in the market. According to a 2025 Morgan Stanley at Work report, nearly four in 10 employees surveyed earlier this year said they reduced their 401(k) contributions in reaction to current economic worries, which isn't always advisable. Financial experts have identified five common habits that sabotage retirement savings, all stemming from our tendency to choose immediate gratification over future financial security. Here's a closer look at these money missteps that can undermine long-term financial health — and practical strategies to overcome them. Want all of The Times? Subscribe.
