Have you looked at your 401(k) lately? Are you afraid to see the damage? If you have looked, you’ve likely seen that your account balance is significantly down from where it was before the pandemic.

What should you do?  The immediate loss can be tough to digest, but you may be up overall thanks to market gains from the previous couple of years.

Though it may be tempting to pull out your money, maintain perspective and consider your timeframe. If you have enough time until retirement, you could be depriving yourself of the opportunity to prosper down the line.

When thinking about your portfolio, keep in mind:

  1. Your portfolio composition
  2. Your time left until retirement
  3. Your risk tolerance
  4. Your asset allocation

Here are some strategies to consider:

Contribute more money

If possible, increase your 401(k) contribution. Maximum contributions are $19,500 (under age 50) and $26,000 (aged 50 or older). Extra contributions now have the potential to increase and put you in a better position a decade or two from now. However, don’t do this at the expense of depleting your emergency fund. Adequate savings should be your short-term focus.

Consider rebalancing aggressively ahead of potential market rises

Your asset allocation should align with your goals. If it doesn’t, consider rebalancing—essentially selling some funds and buying others to get back to the allocation you want.

Investing in a target-date fund or buying stock-heavy funds while prices are low may allow you to reap the rewards in an up market. Again, this strategy can work best for people who have the benefit of time.

Consider not just getting even, but potentially getting ahead

Bottom line: History tells us things will rebound, eventually. Think back to the Great Recession. Those who stayed the course or made aggressive moves during that downturn potentially made back all of their money and then some once the economy came back. There are a few reasons to think that the same thing won’t happen again.

Consider this: If you lost 50% of your 401(k), you’ll need 100% growth to get back to where you were. If you expect that will happen over time, what can you do now to ensure that you not only rebound but end up even better off?

Certain strategies—making higher contributions, rebalancing your portfolio, using cash reserves to buy aggressively—have been known to pay potentially off over time. 

M&T Securities is here for you during this uncertain time, and available to discuss these strategies and other financial opportunities. Speak with one of our financial advisors to determine which 401(k) move might be a good fit for you.


Wilmington Trust is a registered service mark used in connection with various fiduciary and non-fiduciary services offered by certain subsidiaries of M&T Bank Corporation including, but not limited to, Manufacturers & Traders Trust Company (M&T Bank), Wilmington Trust Company (WTC) operating in Delaware only, Wilmington Trust, N.A. (WTNA), Wilmington Trust Investment Advisors, Inc. (WTIA), Wilmington Funds Management Corporation (WFMC), and Wilmington Trust Investment Management, LLC (WTIM). Such services include trustee, custodial, agency, investment management, and other services. International corporate and institutional services are offered through M&T Bank Corporation’s international subsidiaries. Loans, credit cards, retail and business deposits, and other business and personal banking services and products are offered by M&T Bank, member FDIC.  

This article is for educational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service or as a determination that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on their objectives, financial situations, and particular needs. This article is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought. 

There is no assurance that any investment, financial or estate planning strategy will be successful. These strategies require consideration for suitability of the individual, business or investor.

Investing involves risks and you may incur a profit or a loss.  Asset allocation/diversification cannot guarantee a profit or protect against a loss.  Past performance cannot guarantee future results.  

Opinions, estimates and projections constitute the judgment of Wilmington Trust and are subject to change without notice.

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