When Your 401(K) Loses 35%

Posted by Charles D

December 1, 2008

401 k value loss

The easiest answer of course, is to fire your financial or retirement planner. But what to do when you are your financial planner or even worse you can’t get a hold of your planner? It starts with you not being afraid to talk to your account custodian. While almost everyone, including families, was affected by the recent drop in the market, nearly 40% as of this post for the year, things can get a lot worse before they get better. I am not financial expert, nor should you take my advice, but what you can take away is that when your money is at stake, there is no such thing as a bad question. CNN Money expert, Walter Updegrave, recommends,

Ask for more transparency

Whatever the particulars of your situation, this much is clear: You are upset about the performance of your account and you aren’t getting enough feedback from your adviser to know whether the path he wants you to stay on is the right one.

Here’s what I recommend. Go back to your adviser and explain that you need to know what course it is exactly that you are on and why you should stick to it. I’d ask to see how my portfolio is divvied up between stocks and bonds (as well as among different types of stocks and bonds) and I’d want an explanation of why that allocation makes sense given today’s conditions.

I’d also want to see some sort of analysis that shows how much income I can reasonably expect throughout retirement from my investments, Social Security and pensions, if any, and how that income compares to my projected living expenses. More.