Why is My Retirement Account Losing So Much Money?

when your retirement account declines unexpectedly, it may be unnerving. Rest assured that these short-term fluctuations are completely normal.

inflation can be an ongoing threat to retirees (and those saving for it), but this can be managed through having an investment strategy tailored specifically to your financial goals and risk tolerance.

Market Volatility

Market volatility can be daunting for new investors. Yet market volatility is an integral component of investing, providing an opportunity to follow the age-old advice to “buy low and sell high.” Unfortunately, however, market volatility also leads to extreme price spikes – as seen during COVID-19 pandemic fears when major indexes plummeted into bear market territory and spurred on frantic buying and selling activity.

Although markets experience both ups and downs, overall their values continue to increase overall. While it can be frustrating to watch your retirement account balance decline, take comfort that this is part of the investing process and an opportunity for you to buy cheaper investments at these times. It also serves as proof of why diversifying your portfolio and using dollar cost averaging is so essential in today’s volatile marketplaces.


With stock market turmoil and layoff announcements dominating headlines, many people have become concerned that an economic downturn might occur and are reluctant to contribute their retirement savings accounts such as 401(k)s and Individual Retirement Accounts (IRAs). This could affect their decision about contributing regularly towards these retirement savings accounts such as 401(k)s and Individual Retirement Accounts (IRAs).

Recessions are a normal part of business cycle and can be precipitated by any number of events, often being an abrupt shock to the economy, which prompts people to reduce spending, as well as factors like out-of-control inflation and asset bubbles.

Bogle advises his listeners to follow his simple investment advice: Hold stocks for opportunity and bonds for safety, diversifying with low-cost index funds that hold a wide array of assets, and continuing contributions even during times of market instability with dollar cost averaging. That way, when rebounding markets come back around they will be ready for it!


Inflation can erode retirement savings. With costs increasing for things such as food, housing and healthcare expenses; travel and entertainment costs; inflation is often perceived to be one of the primary threats facing retirees – it even surpasses market volatility! In one Charles Schwab survey it was identified as being among the main concerns.

High inflation often has the ability to damage savers as their cash loses purchasing power and lenders who offer lower fixed interest rates for loans. Therefore, retirement savers should evaluate their investments against inflation to make sure they’re adequately covered by them.

Investing in stocks with higher earnings potential and short-term bonds that provide real returns that keep pace with inflation may offer investors the greatest benefit, provided they consider their risk tolerance, spending needs and goals when diversifying their portfolios. An advisor may also help develop an investment plan tailored specifically to all economic conditions.


Although it can be disconcerting to witness your retirement account’s value decline, being patient will help. Market downturns typically reverse themselves within two years; so if you’re near retirement age it’s essential that you remain invested until things turn around – dipping into it prematurely will incur a 10% penalty and reduce its overall return.

Investing for retirement should be seen as an ongoing commitment, so when your IRA balance dips it can be alarming. Instead of selling or withdrawing in panic mode, consider changing your portfolio allocation so it aligns more closely with your risk tolerance and retirement goals.

Fees should also be carefully taken into account before investing. Excessive fees can drastically cut into your returns over time, so always review any fund’s costs before investing. Wealthsimple has created this calculator that shows the effects of fees on returns – this strategy offers the greatest chance for long-term growth potential.

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