With Investments Down, Here Are 5 Ways Employees Can Make the Most of Their Retirement Accounts – The Motley Fool

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You can still set yourself up for a secure retirement even wit…….

Image source: Getty Images

You can still set yourself up for a secure retirement even with the market going down.

Key points

  • The stock market is in the red in 2022, and investors may be frustrated by the bear market.
  • It’s still possible to set yourself up for a secure retirement even during a downturn.
  • Take advantage of employer matches and tax breaks, and keep investing smartly.

In 2022, the stock market has seen major declines. In fact, the market was down 20% off recent record highs, which means it is officially classified as a bear market.

If you’ve seen your investment balance fall, you may be frustrated with your efforts to save for a secure retirement. But the good news is, you can still make the most of your retirement plan and set yourself up for a secure future even during this recent downturn. Here’s how.

1. Take full advantage of any employer match

If you have a 401(k) at work, you should make sure you learn what the rules are for receiving matching contributions from your employer. Many companies match the money you put in, up to a certain percentage of your pay. If you can take advantage of an employer match, you get a guaranteed return on your investment that could be as much as 100% if your contributions are matched on a dollar-for-dollar basis.

Regardless of how the stock market is doing, you should absolutely invest enough in your retirement account to earn your full employer match. Not doing so would mean passing up guaranteed free money.

2. Be strategic about your tax breaks

Many retirement accounts come with tax breaks, but the rules on when you get that savings differ. If you invest in a traditional 401(k) or IRA, for example, you may get an upfront deduction in the year you make the contribution. You save money on your taxes now but have to pay taxes on withdrawals as a retiree. But if you invest in a Roth IRA or Roth 401(k), you don’t get any tax benefits now but you take tax-free withdrawals, so you save later.

Think about what you think your tax situation will be in the future versus right now so you can be strategic about which account you use. If you believe your taxes will be higher as a retiree, a Roth may be better. And, if you are currently investing in a …….


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