Your IRA May Not Recover in 2023. Here's Why That's Okay

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Man looking at tablet with downward trending line graph on it.


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Man looking at tablet with downward trending line graph on it.

If you’re looking at your IRA balance this month and are unhappy with the number you’re seeing, you’re certainly not alone. Many people lost money — a lot of money — in the stock market last year, at least on paper or on screen. That’s because the market sorely underperformed. That, combined with a major meltdown in the tech sector, has left a lot of investors reeling and feeling very unsettled.

If your IRA lost money in 2022, you may be hoping that your portfolio will recover fully in 2023. But it’s hard to say whether that’s likely to happen.

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Sure, the stock market could rebound this year. And you may find that by December 2023, your IRA balance is as high as it was before the market tanked last year.

But it’s also possible that your IRA won’t recover this year. And it could even end up losing additional value.

Those last two scenarios really aren’t something to panic over, though. And the sooner you tell yourself that, the less stress you might have to endure.

It’s important to think long term

If your IRA balance is down now compared to where it sat a year ago, it’s natural you’d want it to recover as quickly as possible. But don’t worry if the next 12 months aren’t kind to your portfolio.

Saving for retirement is something you’re supposed to do over multiple decades. And if you’re many years away from retirement, it means you have plenty of time to recover from the events of 2022 and still wind up with a sizable nest egg.

In fact, let’s say you just turned 35 and your goal is to work until your mid-60s. That means your IRA has a good 30 years to recover. So why put the pressure on for a near-term recovery?

Sure, a quick recovery would be nice. But if it doesn’t happen, know that you still have plenty of time to see your IRA balance pick back up.

Keep saving and investing

Even though the stock market has been volatile over the past 12 months, it’s still a good idea to keep funding your IRA in 2023. First of all, any money you put into a traditional IRA will serve as a tax break and shield some of this year’s income from the IRS. And even if you opt for a Roth IRA and don’t get an immediate tax break on your retirement plan contributions, you can still invest your money and enjoy tax-free gains.

In fact, since the stock market is down right now, it’s actually a pretty good time to invest, since you can scoop up quality stocks at a discount. So even if your portfolio balance is way down, don’t assume you should ditch your IRA and stop investing this year. Instead, keep at it, and keep telling yourself the stock market is apt to recover.

That may not happen anytime soon. But you don’t need it to happen soon. You just need it to happen eventually.

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