Inflation and your 401(k)

Inflation and Your 401(k)

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Unfortunately, you can’t stop inflation as it’s out of our control. But you can be mindful of it and implement specific strategies to help lessen the burden of inflation on your 401(k). Here are some ways to help lessen inflation’s impact:

1. Maintain your contributions

When your paycheck doesn’t go as far as it used to, it can be tempting to reduce your 401(k) contributions. If possible, maintain them to ensure you get the full match if your company offers it. You might even want to increase your contributions so that more money goes into your account. In 2022, you can contribute up to $20,500 or $27,000 if you’re 50 or older.

2. Diversify

Diversification means spreading your money across different types of investments to reduce risk. During periods of inflation, it’s a good idea to diversify your portfolio with a mix of strategies that can help weather volatility and inflation. 

3. Pay attention to fees

While minimizing investment fees is important, it’s essential when inflation has the potential to erode your 401(k) returns. The less you pay in fees, the more of your returns you’ll get to keep in the long run. Speak to your financial professional about your fees and what you can do to lower them. Also, consider less expensive strategies that are appropriate for your situation.

Meet with your financial professional

Meet with your financial professional. Your financial professional understands how inflation impacts 401(k) accounts. If you’re unsure what to do with your retirement savings, don’t hesitate to reach out to them for advice. 

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