How Would 401k Savers React to Another Market Drop? – The 401(k) Specialist (blog)

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Good question, considering last month’s return to volatility. Major market swings tend to stir up 401k participants’ financial fears, or at the very least renew their focus on money matters. So, how are Americans reacting in the wake of recent events?

While February’s spike in trading activity suggested otherwise, a new survey of 1,000 adults found a majority claims to be unshaken.

According to the COUNTRY Financial Security Index, 52 percent of Americans say they are financially prepared for another loss—even if the Dow were to plunge 6,000 points. A mere 15 percent do not believe their finances could withstand this type of hit. Around three in 10 respondents say they are uncertain.

To be sure, investor confidence fluctuates by age—but not exactly in the most predictable way. Only 35 percent of Millennials think they could handle another major downswing. Meanwhile, seven in 10 adults ages 65 and up say they are financially prepared for a significant market loss.

Whether drawing confidence from the nine-year-old bull market or recent stock corrections, it’s likely some investors are simply playing it cool—especially since just 28 percent report having a solid financial plan in place.

And as for the effect 401k savers think market up-and-downs will have on retirement savings? “Six in 10 Americans (61 percent) are ‘not sure’ of how long their retirement might be delayed should a large 6,000 point drop in the Dow occur. Nearly one in four (23 percent) estimate such a drop might delay their ability to save for retirement by one to two years.”

“Recent fluctuation in the stock market likely tested some Americans’ financial plans,” Doyle Williams, executive vice president at COUNTRY Financial, said in a statement. “While there has been some market volatility, there’s no reason to panic. Americans can take some simple steps to better manage their savings, including diversifying their assets and developing longer-term strategies that don’t change with every market fluctuation.”

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