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The significant drop in the stock market could impact your 401(k)

North Carolina A&T Economics Professor, Dr. Scott Simkins, said this could continue for a while but don't panic. He said it'll eventually get better.

GREENSBORO, N.C. — It’s no secret that the stock market has dropped significantly within the last few weeks.

Wednesday alone, DOW is down over 300 points. One area you may feel the blow is your 401(k).

North Carolina A&T Economics Professor, Dr. Scott Simkins, said this could continue for a while but don't panic. He said it'll eventually get better. 

Dr. Simkins said when you look at the screen below of the Dow Jones Industrial Average, and the year to date, it looks pretty bad. 

Credit: Google

However, if you look at the last five years, we are still in the green. 

Credit: Google

Dr. Simkins said this is good news.

Basically, because of the stock market. More shares are being bought for cheaper, so you'll reap the benefits later on.

"So if one looks at the recent drop, while significant, in perspective, you still are coming out all right over this period of time," Simkins said. 

So what does this mean for retirement plans? 

"So, there's been a big, big drop in the reports that people get in their quarterly or monthly reports that they get on their 401k and their retirement accounts. Those are a little bit hard to handle," Simkins said. 

Simkins said the stock market is certainly, really volatile right now, because of all the uncertainty in the economy.  

The uncertainty he's talking about: COVID-19, supply chain issues, the war in Ukraine, inflation, oil prices, gas prices and so much more. 

There is a plus side. 

Simkins said, "If you're contributing regularly to a retirement account, this is an opportunity for you actually, to get more bang for the buck. Perhaps, as long as long term, that stock market is going to be a place that's going to continue to rise and benefit you long term."

Now, this isn't good for people wanting to retire right now and those who have already retired. 

Simkins said the advice he has for those people, includes cutting back on spending and working a little bit longer to get through this rough patch.  

In the long run, the hope is that things are okay when the uncertainty is reduced.

So, it will get better. We just don't know when.