Ask Terry Questions 457b contributions

457b contributions

By Terry Savage on May 09, 2017 | Investments

Hello Terry. Part of my retirement planning, I invest in a 457b through my employer. I have about $225,000 in my plan, I contribute $1100.00 per month into this particular plan. I plan on retiring in late 2020. Here is my question. Should I keep my current funds allocated in various funds ( i have 8 different funds), or should I put all of my money into a cash / fixed fund, currently at 2.87% My 457b is with Nationwide.

Terry Says

Ah, this is the toughest question of all.  What you're really asking is "is it safe to keep so much money in stock market funds as I near retirement"?  And I wish I could give you a specific answer. But the fact that you're asking the question at all means this is keeping you up at night.  You've made profits, and you don't want to lose them.  There's an old market saying "sell down to the sleeping point."  That means you might want to move at least one-third of your money to the safer alternative.  That way you won't panic in a market decline.  After all, you are likely to live about 20 years in retirement, and do need some stock market growth over the long run. Now, to be fair, I would have given you this same advice 3,000 points ago on the Dow!  So you would have missed some profits had you asked back then -- just a few months ago, before the election.  But I've found it easier to sleep at night knowing that I have some "chicken money" that will carry me through any market decline.

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