Expert Reveals the Worst Time To Stop Funding Your Retirement Accounts

Core Insights - The article discusses the importance of continuing to fund retirement accounts, particularly during market downturns, to avoid locking in losses and to benefit from compounding growth over time [3][5]. Group 1: Market Conditions - Stopping contributions during a market downturn can lock in long-term losses and undermine the benefits of compounding [3]. - Historical data shows that the S&P 500 has an average annual return of 6.69% (adjusted for inflation) and has always rebounded after downturns, such as a 54% drop in February 2009 and a 28.5% drop in September 2022 [4]. Group 2: Timing and Contributions - Investing only during market upswings results in lower overall returns, and panic selling during downturns locks in losses [5]. - Early and consistent contributions significantly enhance the final balance due to the power of compounding; for instance, contributing $7,000 annually to a traditional IRA from age 30 could yield approximately $967,658 by age 65, compared to $442,743 if contributions stop at age 55 [6][7].