Managing Your 401(k) Through Crisis
Today’s workers are implored to contribute to their 401(k)s – and for good reason. The practice is rooted in a simple concept. Workers deduct, contribute, and invest a portion of each paycheck automatically. The 401(k) portfolio ideally grows over time with minimal thought or oversight until retirement.
But what happens when a crisis interrupts this rosy picture? The last several years have seen soaring costs, fluctuating markets, and increased uncertainty. It should be no surprise that workers are tweaking their 401(k) investments and tapping their retirement savings more than usual.
The definition of a crisis varies from person to person — it might be a sharp 6% market drop in a single day, like we saw in early April, a medical emergency, or even a job loss. Regardless of the situation, a clear decision-making framework can help you navigate the unexpected. It's also essential to understand how your retirement plan fits into this picture.
A recent survey found that 4.8% of Americans took early retirement withdrawals in 2024. Moreover, the first quarter of 2025 witnessed the highest level of 401(k) trading activity since the early pandemic. Both statistics are symptomatic of a financially insecure workforce.
These developments also suggest a potential education gap. Workplace seminars tell employees to stay the course with little context. Such sessions might even allude to special exceptions that allow employees to access their 401(k) money before retirement. Business owners and their employees often walk away from these educational sessions with an incomplete understanding of how their plans actually work.
Following is a framework for managing your 401(k) plan through good times and bad.
