This is a tough choice because none of us knows when a bear market will begin. You can’t do a rollover unless you leave your job. You only have the choices within the plan — and this illustrates why older workers have a real investment problem. These 40l(k) plans are designed for younger workers to build assets over the long run — not for those close to retirement who are worried about losing the money they have!
Is there an “investment advice” service offered with your plan? If so, consult with them immediately and explain your issue. You definitely will need some exposure to the stock market to counteract the impact of inflation over the next 25 years you are likely to live. In fact, at only 3 percent annual inflation, your spending power is cut in half in 25 years! So this is not a suggestion to sell out completely from the stock market. But I’m thinking that no more than 55 percent (as a round number, and depending on many more aspects of your personal situation) be in the market right now. Ask the plan consultant if there is any way you could invest in a Deferred Income Annuity (DIA) within the plan — promising income that starts long into the future.
Another consideration: You may be in a lower tax bracket now than in the future, depending on how politics turn out. Paying taxes on some of the money and removing it from your tax-deferred plan goes against common advice. And if you do remove it, put it some place safe. Or else, opt out of more plan contributions this year — and save up some more money outside the plan. You’ll lose the match — but have the cash. None of these is an ideal solution and I recognize that.
If you want to discuss your specific situation, beware of annuity salespeople. I suggest a Fiduciary financial planner. Search for one at Wealthramp.com