401(k) Specialist Magazine Talks to Five Pathways Director Nate Towers About the Recent Stock Market Drop

Last week, 401(k) Specialist ran a story about the 1000-point market correction that happened Monday, August 5. The stock market drop had its worst one-day drop since the crash after Black Monday in 1987, starting with the Nikkei 225 in Japan, which fell more than 12%.

Some investors were panicking about their losses last week, as financial and retirement advisors did their best to help clients stay calm. 401(k) Specialist’s Editor-In-Chief reached out to several of them, including Nate Towers, founder and director of the retirement planning firm Five Pathways Financial.

Nate said that because Wall Street’s fear gauge has escalated to levels not seen since March 2020 during the COVID-19 pandemic, he’s noticed a significant increase in 401(k) participants wanting to do in-service rollovers of at least a portion of their assets.

“The primary reason is that they feel a lack of control over the options available within their plan, especially due to a lack of education on utilizing more conservative products like income annuities. In these chaotic times, the need for guaranteed income is at an all-time high as people seek stability they can count on,” Towers said.

“The only real panic people have with the market is the fear of losing time. This fear often manifests as selling off stocks and other assets, but it fundamentally concerns their retirement and the finite time they have to secure it. They want to create something they can control and rely on, like guaranteed income from an annuity, alongside a self-managed market strategy,” Towers added.

He’s been teaching his clients that guaranteed income provides them with a “permission slip” to be more flexible in managing their funds. “By securing a portion of their assets with guaranteed income products, they are not entirely dependent on the market for the income they need,” he said. “This allows them to be more aggressive or passive in their investments and the ability to reduce fees by self-managing, knowing that their essential income is secured elsewhere.”

Read the entire story here: https://401kspecialistmag.com/market-downturn-reaction-retirement-advisors-stress-restraint/

Guaranteed income is backed by the financial strength of insurance companies making the contractual guarantees.