Is Now A Good Time To Make Changes To My Retirement Accounts?


You’ve always heard that you’re supposed to “buy low, sell high,” so how can now be a good time to make changes to your retirement accounts? Isn’t the market down? Won’t it lock in your losses? How can now be a good time to start working with a financial advisor who may ask you to roll over your retirement accounts?

These are all questions I’ve been asked over the last month since the market downturn due to the coronavirus. I’d say, yes, the old adage is true, you want to “buy low, sell high.” But here’s the secret that many people don’t know: if you do an account rollover of your 401(k), IRA or other account, you are not technically locking in the losses!

If the downturn in our current financial market comes at a time that you are nearing retirement and you’re worried that making any changes by starting to work with a financial advisor will lock in the losses, you need to know that “rolling over doesn’t have to mean selling.”

In actuality, working with a financial advisor while markets are down is precisely what you need to have an advantage, because they can help you choose to make changes that will take advantage of the situation and better position yourself for when the market rebounds.

Federal Reserve Chairman Jerome Powell said on April 9 that the economic recovery after the coronavirus-induced shutdown “can be robust.” While I personally anticipate some of the market will rebound sharply, I’m not so sure everything will. Through the CARES Act, we just printed $2 trillion worth of quantitative easing and that has to pose some potential problems for the future, whether that’s inflation or deficits.

Analysts refer to this as a “middle market,” which is when you have signs of both a recession and economic expansion or a “market boom” at the same time. We have certainly experienced both of these realities in the last month. Having your portfolio allocated now in such a way to benefit from this reality is better than waiting for that rebound that might never come if you were only in investments.

Ideally, a financial advisor will help you think through these things and allocate a portion of your retirement portfolio in investments that may potentially benefit from the sectors that rebound positively. Of course, we don’t know with absolute certainty what those sectors will be and since they are tied to the market and carry some risk, I call this “red money.” I like to balance out that vulnerability by putting a portion of your portfolio in investment products that are designed to help protect from an oncoming recession or depression. This is money that will always be there to pay your essential bills; I call this “green money.” This is the essence of the red money, green money framework I use to help my clients pursue their retirement goals and what I recommend anyone planning their retirement portfolio to consider.

I’ve had a few people ask me if I’m hesitant to call clients during these times of uncertainty, and I’m very happy to report that I’m not! I’m not, because my clients have retirement portfolios built on this framework.

I chose this topic this month because I’ve heard too many people speak of being overwhelmed and paralyzed by the market downturn. They want to wait until everything “blows over” or “settles down” before making any changes; they don’t want to face how recent events may have affected their retirement plans. I understand why you would feel that way; this is an emotional time! But I hope this article will educate you to see that now could be the perfect time to consider all your options. If you are within 10 years of retiring, speaking to a financial advisor could be incredibly valuable to you. It’s helpful to talk through your personal situation with someone who is not emotionally connected to your money and who has been working in this industry long enough to have seen markets like this before. Find a reputable financial advisor, make an appointment, and remember that you now know the secret: making changes now doesn’t have to mean you are locking in your losses. In fact, it could end up being the smartest thing you could do for your retirement.


Jason LaBarge, Financial Advisor and Managing Partner at Premier Planning Group
115 West Street, Suite 400 Annapolis, MD 21401 443-837-2520

Securities offered through Cetera Advisor Networks LLC, member FINRA/SIPC. Advisory services offered through Summit Financial Group, Inc., a registered investment adviser. Summit and Cetera are affiliated and under separate ownership from any other named entity.

Asset allocation is an investment strategy that will not guarantee a profit or protect you from loss. A diversified portfolio does not assure a profit or protect against loss in a declining market.

Before deciding whether to retain assets in a 401(k) or roll over to an IRA, an investor should consider various factors including, but not limited to, investment options, fees and expenses, services, withdrawal penalties, protection from creditors and legal judgments, required minimum distributions and possession of employer stock. Please view the Investor Alerts section of FINRA website for additional information.


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