Continue to Think Long Term in Volatile Markets

Regardless of the current volatility in the financial markets, it's important to stay focused on your future.

woman reviewing investments

Stay Focused on the Long Term

Your retirement plan is designed to help you save money over the long term. While short-term news in the stock market can be unsettling, overreacting to recent events by making changes to your asset allocation is not a sound investment strategy. While it may seem tempting to try to avoid losses in the equity market, the truth is that nobody can predict when markets are going to reverse course, and it is impossible to get back in at the "right" time. We know from past experience that markets typically recover and move higher once the panic subsides, and you want to make sure your money is properly allocated to benefit from the market recovery when it happens. If you have an asset allocation that is appropriate and prudent based on your age, risk tolerance and/or your expected retirement date, then it is generally best to stay the course rather than make hasty decisions that may hurt your portfolio's performance over the intermediate or longer term.

Equity Returns Rise and Fall over Time – BUT Historically Have Risen over the Long Term

Stock market returns have been very strong over the last decade, and declines in the equity market are not unexpected from time to time. Although past performance is not a guarantee of future returns, and you can lose money on your investments, you should invest for the long term to reduce your risk of outliving your assets in retirement, called longevity risk. Longevity risk can increase with an asset allocation that does not allow your money to grow in a prudent manner based on your risk tolerance and planned retirement date.

Asset Allocation Helps You with Long-Term Investing

Your mix of investments, or asset allocation, is a key factor in helping you meet your retirement goals. Participants who have a much longer time horizon before retirement typically invest more of their retirement funds in equities. Compared to a participant who is at or near retirement, he or she has a much longer time horizon to recover any losses in equity markets and continue to grow his or her assets over time. For participants who are at or close to retirement, an asset allocation that puts more of their money in fixed income investments helps limit portfolio losses caused by declines in equity markets. However, this asset allocation will likely not experience the magnitude of the recovery once markets reverse course. This is why it is very important to have a diversified portfolio of both equities and bonds that is appropriate for your time horizon.

For participants who have less investment experience or for those participants who choose to take a less active role in their investment decisions, the following funds that provide asset allocation for the investor are available:

  • Target-date Retirement Funds
  • Risk-based Funds
  • Balanced Funds

For those participants who choose to build their own asset allocation with index and active funds, now is an appropriate time to review your portfolio to ensure it is well diversified and not overly weighted in a particular type of investment.

Your Payroll Deduction Contributions Are Invested on a Regular Basis

Contributing money to your retirement plan on a regular basis, for example, 3% of your pay every two weeks, can also reduce risk. The financial term for this approach is dollar-cost-averaging, which means you invest in the financial markets regardless of whether the market is up or down. As a result, when the equity markets are rising, you purchase fewer shares of a fund, but when the market has declined, you are able to purchase more shares. This approach is a consistent way to add to your retirement savings while avoiding trying to time the market.

Speak to a Mutual of America Representative before Acting

Before making a rash decision, please consider calling your local Mutual of America representative. As always, they are available to help educate you as you save for your retirement.

You should consider the investment objectives, risks, and charges and expenses of the variable annuity contract and the underlying investment funds carefully before investing. This and other information is contained in the contract prospectus or brochure and underlying funds prospectuses and summary prospectuses, which can be obtained by calling 1-800-468-3785 or visiting Read them carefully before investing.

Mutual of America's group and individual retirement products are variable annuity contracts and are suitable for long-term investing, particularly for retirement savings. The value of a variable annuity contract will fluctuate depending on the performance of the Separate Account investment options you choose. Upon redemption, you could receive more or less than the principal amount invested. A variable annuity contract provides no additional tax-deferred treatment of benefits beyond the treatment provided to any qualified retirement plan or IRA by applicable tax law. You should consider a variable annuity contract's other features before making a decision.

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