RICHMOND, Va. (WWBT) – After the S&P 500 closed in bear market territory on Monday for the first time since the start of the pandemic, this volatile market has many concerned for their 401K and financial investments.
“I never thought our country would be in this situation that we’re in,” Sherry Lowry, who retired almost four years ago, said.
Lowry has been living off a fixed income for years, but with what’s happening on Wall Street and the increase in the price of everyday goods, she’s concerned about her retirement funds.
“The retirement hasn’t really gone up that much as with the groceries and the gas prices, everything; it’s impacted our whole lives,” Lowry said.
NBC12′s financial expert Carl Carlson believes part of the dip cause is record-high inflation, reaching a 40-year-high last month at 8.6 percent.
“We’re seeing a lot of volatility in the stock market right now, and that just means it’s going up and down a lot, and it’s reacting mostly to inflation numbers,” Carlson said.
Carlson said the Federal Reserve is the main tool being now to slow down this inflation by raising interest rates.
He said, as history has shown, it’s not full-proof.
“You know, back in the 70s and 80s, they had to raise it all the way from 5 percent roughly all the way up to 21 percent, and then inflation started to back off,” Carlson said.
Carlson said if you have a 401K or an IRA, you probably see a big dip in its value.
His advice for those retired or retiring soon is to wait and not to touch it.
“I would say don’t get scared and go and liquidate everything to a cash position because you’re going to take a substantial loss, and then when do you get back in,” Carlson said.
As prices continue to rise, it has some rethinking just when they should finally stop working.
“I had plans to maybe look at retirement in a year or two, but now you just keep working and paying the bills,” John Lowry, Sherry’s husband, who still works, said.
The Federal Reserve is poised to make a big interest rate hike on Wednesday to slow inflation.
This will also make new homes or cars more expensive and drive up credit card rates.
Copyright 2022 WWBT. All rights reserved.
Want NBC12’s top stories in your inbox each morning? Subscribe here.