How to Manage your Retirement 401k Plan during a Recession

Posted by Melissa Rubin in Retirement Investing.

How to Manage your Retirement 401k Plan during a Recession

Many doubts may arise during a recession as to the effectiveness of an individual’s retirement investing. The two biggest forms of retirement savings are in senior social security and retirement 401k plans. The retirement 401k plans have been a part of your life since you started a job at 18. However, how to fully get the most out of your plan has changed in the recession.

In managing your retirement 401k plan for your retirement investments think first about how the economy has changed. Roger Ferguson, CEO of TIAA-CREF and former Vice Chairman of the Federal Reserve, goes through how to manage your retirement investing and 401k plan. The highpoints he discusses involve conditions the economy and workforce must have/offer employees when they are putting together their retirement 401k plan. According to Ferguson:

  1. We need to have a system that encourages everyone to save through automatic enrollment and be educated on how much to save
    1. 10-14% of income is what people should set aside for safe and secure retirement
  2. Individuals need non-commissioned and objective advice on where to put their retirement investments
  3. Companies need to have the right range of economic options in which to place their retirement investing- too many and people freeze, too little and people don’t have enough choices
    1. 15-20 choices is optimal; it allows for risky investment appetites while not overwhelming people with options
  4. There needs to be a  vehicle that allows people to have guaranteed income through retirement