As a fresh calendar year commences, it’s an ideal opportunity to assess your retirement savings strategy and ensure you’re moving in the right direction. However, there’s a fine line between being proactive and being overly anxious. For some, the temptation to frequently check retirement accounts following every piece of financial news can be irresistible. Yet, a word of caution: it’s advisable to reduce the frequency with which you monitor your 401(k).

In the face of unsettling news concerning the stock market, inflation rates, or job statistics, it’s completely normal to be preoccupied with the current state of your retirement funds. However, resist the urge to check your balance every time headlines spark concern—instead, consider simply ignoring it for a while. This brings us to the reasoning behind this advice.

Your 401(k) Is a Long-Term Investment

Jim Keenehan, a seasoned consultant from AFS 401(k) Retirement Services, LLC, emphasizes the importance of viewing your 401(k) not as readily accessible cash but rather as a future income source. “Think of it as savings that will fund your paycheck during retirement,” he advises. When you retire and stop earning, that’s where your set-aside funds come into play. Current fluctuations in the balance are immaterial unless you are nearing retirement age.

It’s easy to forget this perspective when market downturns immediately translate to lower account balances. The instinct to check your funds during turbulent financial times can be compelling. However, Keenehan points out that such behavior can ultimately be harmful. “It might seem enjoyable when the market is thriving and your investments are flourishing,” he notes. “But remember, markets do not only trend upward.” Regardless of daily shifts, your investment journey is meant for the long haul.

When Is It Appropriate to Review Your 401(k)?

According to Keenehan, there are legitimate circumstances for accessing your 401(k) account beyond just the thrill of seeing a rising balance. Significant reasons may include altering your contribution amount or updating beneficiaries.

It’s perfectly acceptable to manage your investment allocation, but once adjustments are made, focus on letting them grow rather than checking frequently unless personal circumstances warrant a reevaluation (as opposed to market fluctuations).

In general, Keenehan recommends limiting checks to an annual basis. To maintain a clear perspective, consider making changes to your investment portfolio just once a year, preferably with guidance from a financial advisor, if possible. Engaging a professional can help navigate decision-making.

Strategies to Minimize Preoccupation with Your 401(k)

Keenehan emphasizes the mental health benefits of avoiding fixation on daily balance updates. Instead of obsessing over short-term fluctuations, strive to focus on the overarching landscape of your financial situation. Consider consulting with a financial advisor, or check if your employer provides access to one who can clarify your queries. (If they offer a 401(k) program, that should be available.)

“Meeting with a fiduciary financial advisor is essential,” Keenehan suggests. The term ‘fiduciary’ is crucial, as it signifies that the advisor will prioritize your best interests. In today’s chaotic financial media, many sensational headlines aim to provoke reactions rather than provide sound advice. They are often designed for clicks, not for guiding your retirement savings.”

In summary, refrain from making financial decisions based solely on a news article, social media trends, or instinct. Instead, engage a knowledgeable advisor who can help interpret market changes and provide calm guidance. Aim to have this discussion annually. Beyond that, dispense with unnecessary logins.