Woman frustrated by what she sees on computer screenWoman frustrated by what she sees on computer screen

Stop Checking Your 401(k) Account

It’s Wise to Get Some Distance from Your 401(k)

The retirement plan type known as 401(k) didn’t even exist until the late 1970s. Yet, today, so many people rely on their 401(k) account to cover the bulk of their retirement savings. Now, with over $7.3 trillion in assets – a figure that’s more than doubled during the last ten years – 401(k) accounts represent the savings of 60 million active participants (and that number doesn’t even include former employees, and retirees).

When you were young and had a lot of working days ahead of you, you probably paid little attention to the health of your 401(k). But as you move closer to retirement, it’s tempting to check to see if you’re still in good shape.

It’s natural to be curious. Just don’t fall into a habit of checking your 401(k) account too frequently.

2 Reasons Why Checking Your 401(k) Account Too Often Can be Damaging

1 You’re More Likely to be Exposed to Bad News

Since 1929, the S&P has posted declines on nearly half the days when the market was open. That means someone who checked their account every day would have almost a 50% chance of seeing bad news.

But the odds of seeing negative returns dropped to 25% for someone who checked only once per year. And at 10 years out, the likelihood of a loss dipped down to just 6%.

Seeing bad stock market news may make you want to intervene in the hopes of making things better. That’s risky behavior, as we’ll explain next.

2 You’re Likely to Act Based on Emotion Instead of Logic

Behavioral economists Shlomo Benartzi and Richard Thaler say that the pain of losing is more powerful than the good feeling you get when you’re winning. It’s a behavior they’ve termed, “myopic loss aversion.” Investors may see their account balances lose value and decide to sell at an inopportune time – completely disregarding their long-term goals.

The average investor typically underperforms the market. Why? Because the average investor often lacks patience and reacts to market highs and lows inappropriately. In other words, they may chase returns when the market is doing well, and panic sell when there’s a downturn.

Peter Sokol-Hessner, a cognitive neuroscientist, says that feeling stressed and anxious can cause us to make decisions based on a fight-or-flight approach rather than reason. Stress, he says, causes people to “fall back on simpler methods of approaching your world. You have a decreased ability to use your previous experiences and knowledge to make smart choices in new settings.”

What Should You Do When the Market is Volatile?

Telling yourself you won’t check often is easier said than done. You may have to literally delete apps that make it simple to access your 401(k) account. That’s a good start.

But whether you have the willpower to stop yourself from checking isn’t really the point.

The approach you take during periods of volatility should be the one you take when the market is steadier: You stick to your plan.

When you build a plan, you’re forced to answer questions like, “What are my short-term and long-term goals?” and “What is my risk-tolerance?” You’ll know what you own and why you own it. And you’ll have already determined which triggers will cause you to act because you thoughtfully anticipated them. When you design your retirement plan for your unique goals, it will be easier to avoid acting impulsively.

Alpha Wealth Group Can Help You Create Your Retirement Plan

If you don’t already have a plan, the retirement plan consultants at Alpha Wealth Group can design one for you. Free of charge. We’ll determine how to achieve the best chance of meeting your income goals throughout your retirement years.

For more information or to schedule a complimentary consultation, contact us here. You can also reach Tom Fortino at (630) 519-4742 or

We look forward to working with you.

Investment advisory services offered through Retirement Wealth Advisors, LLC (RWA), a registered investment advisor and an affiliate of Brookstone Capital Management, LLC. RWA and Alpha Wealth Group are independent of each other. Insurance products and services are not offered through RWA but are offered and sold through individually licensed and appointed agents.