Why You Should Still Prioritize Retirement Contributions in a Bear Market

Worst Market in About 50 Years

During the year’s first six months, the US stock market posted its worst returns since 1970. The broad market S&P 500 index has fallen about 20% in the first two quarters amid the Fed’s tightening monetary policy, prompted by the highest inflation in decades.

Though the labor market remains tight, consumer confidence is showing signs that more Americans are worried about a possible recession. Many are thinking about how to stretch their incomes amid escalating prices for everything from groceries to gas. With so much financial uncertainty, some people are holding on to dollars they may have invested during less troubling times.

Fleeting Opportunity

A May 2022 survey by BMO Harris found 21% of Americans have dialed back contributions to their retirement accounts. But advisors say those who are considering taking a pass on this year’s investment may want to rethink that decision.

Regularly investing in a 401(k), IRA and/or Health Savings accounts allows your portfolio to benefit from tax-advantaged growth for a longer time, which can make a big difference when it comes time to retire.


If locking up these dollars creates anxiety, some account managers suggest a prioritized approach. 401(k)s offer the highest contribution limit. Health Savings Accounts, or HSAs, can snag triple tax advantages. A Roth IRA can diversify tax exposure as taxes are paid up front, rather than when funds are withdrawn after retirement, as with a traditional IRA.

Zooming out, long term goals such as retirement should still remain a priority during market uncertainty. With the proper risk tolerance and time horizon, investors have more time to weather the storms.

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James Flippin ABOUT James Flippin James Flippin is the son of a financial advisor who grew up hearing and learning about bond yields, interest rates, the stock market, and the ins and outs of Wall Street. After stints as a licensing and business broker for Marcus and Millichap in New York City, James moved into broadcasting and became a reporter and anchor. He covered crime, politics, finance, and tech at NBC News Radio while working part-time as a producer for SiriusXM. James graduated from the University of Delaware with a bachelor’s degree in political science and economics. He's also an accomplished podcaster with over 10-years of experience.

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