Essential Strategies for Teachers, Healthcare Workers, and Nonprofit Employees to Secure Their Savings
Scenario
You’ve spent years contributing to your 403(b), expecting it to grow into a reliable retirement fund. But when the market takes a downturn, you suddenly see your balance drop. If you’re close to retirement or risk-averse, this can be stressful. You don’t want to gamble with your future, but you also need growth. The good news is that there are ways to prevent losses while still growing your retirement savings.
How to Protect Your 403(b) from Losses
- Choose Safer Investment Options
- If your 403(b) allows it, shift some of your money into stable value funds, fixed annuities, or money market accounts. These options provide protection against market downturns but offer lower returns.
- Diversify Your Portfolio
- Instead of relying on one type of investment, mix stocks, bonds, and conservative funds. A well-balanced portfolio can help cushion against market volatility.
- Move to a Fixed Index Annuity (FIA) with a Bonus
- A Fixed Index Annuity (FIA) is an excellent option for preserving your retirement savings while still allowing for growth. Unlike mutual funds or stocks, an FIA protects your principal from market losses while earning interest based on a market index, like the S&P 500. Some FIAs even offer an upfront bonus (often 5-10%) to help offset any previous 403(b) losses.
- How It Works:
- Your money is never directly in the stock market, so you won’t lose principal during downturns.
- You earn interest based on an index’s performance, but with a cap or participation rate.
- You get guaranteed income options, making it a great tool for retirement security.
- Rebalance Your Allocations Regularly
- If your plan allows, review your 403(b) allocations every year to ensure you’re not overexposed to stocks or risky assets as you get closer to retirement.
- Use Dollar-Cost Averaging
- Investing a fixed amount at regular intervals (instead of lump sums) helps lower the impact of market volatility. When prices drop, you buy more shares, improving long-term returns.
- Take Advantage of a 403(b) Rollover
- If your 403(b) is from a former employer, consider rolling it over into a Fixed Index Annuity (FIA) for more safety and better growth potential. This allows you to move your funds into a contract that guarantees no losses while still earning market-linked interest.
- Set Up a Guaranteed Lifetime Withdrawal Benefit (GLWB)
- Some FIAs come with a Guaranteed Lifetime Withdrawal Benefit (GLWB), ensuring you receive a steady income for life, even if your annuity balance runs out. This provides higher and more reliable income than the traditional 4% withdrawal rule.
Who Needs This?
- Teachers and non-profit employees close to retirement who can’t afford losses.
- Risk-averse investors who want protection while still growing their money.
- Anyone with an old 403(b) who wants to roll over funds into a safer option.
Who Doesn’t Need This?
- Younger employees with high risk tolerance, as they have time to recover from market losses.
- Those who prefer actively managing their investments instead of using annuities.
Next Steps
Don’t let market losses drain your retirement. Book a call with our agents today to compare Fixed Index Annuity options and see how much you can gain from a bonus when rolling over your old 403(b). Our service is free, and we’ll help you find the best solution for your retirement security.
Book A Free Consultation
Get help from a licensed financial professional. This service is free of charge.
Let Us Answer Your Questions
Not quite ready for a meeting, but you have a question that needs answering? We’re happy to help. Leave an inquiry below, and one of our staff will respond via email.