Average 401(k) balances are down more than 20% this year. Here’s what experts say you should do to make it through a volatile market

Saving for retirement is one of the most important financial to-dos, but the journey from a zero balance to a comfortable savings you can live off of in your later years isn’t always linear. According to the latest data from Fidelity, the average 401(k) balance dropped for the third consecutive quarter, and is now down almost 23% from a year ago to $97,200. Some of the major culprits? A rising inflation rate and massive stock market swings.

“Many 401(k) account balances are decreasing because the largest asset classes (stocks and bonds) are down double digits this year,” says Herman (Tommy) Thompson, Jr., certified financial planner with Innovative Financial Group. “In addition, economic hardships including rising inflation and job cuts have forced some participants to take loans and distributions at the worst possible time–when the markets are down.”

The do’s and don’ts of investing in a volatile market

So how should you handle swings that could be impacting your retirement savings balance? Here’s what the experts suggest:

Hold steady and continue to save. Yes–even when things are bumpy, you should continue to save for retirement, and most savers are taking note. According to Fidelity, the average 401(k) contribution rate, including employer and employee contributions, held strong at 13.9%. In fact, the majority of workers (86%) kept their savings account contributions unchanged, and 7.8% actually increased their contribution rate.

Investing in your 401(k) is a form of dollar-cost averaging, which is an investment strategy that requires you to invest the same amount at set intervals, no matter what. One of the major benefits: this approach takes the emotion out of investing and ensures that you don’t make any sudden moves that could end up costing you even more down the line. “It is best not to panic at near-term weakness: it gives the long-term investor the opportunity to invest future contributions at lower prices,” says Karl Farmer, CFA, Vice President and portfolio manager at Rockland Trust. Another perk of staying the course: employer contributions. By continuing to invest consistently over time, you can be sure to benefit from employer contributions and grow your balance.

Don’t borrow money from your 401(k). If you can help it, you should try to avoid borrowing from your 401(k). While only 2.4% of savers initiated a new loan in Q3, major changes to your balance or changes to your financial situation in a tough economic climate could make you consider tapping into your 401(k) funds. Most experts would agree that this isn’t the wisest long-term plan. Borrowing from your future self comes with its own set of risks, like taxes, penalties, steep interest rates, and losing out on the potential growth you would’ve seen if you’d left your money alone.

Avoid making any impulsive changes to your asset mix. You might want to hold off on making major changes to the mix of assets you’re investing in. “Retirement plan savings such as 401(k) accounts should be managed with an eye on the long term,” says Thompson. “Reducing risk after your portfolio has already suffered a double-digit drawdown, usually results in not having enough risk in the portfolio when markets recover.”

The takeaway

If your investments are making you uneasy, take a break. Fixating on short-term, day-to-day market swings could lead you to act impulsively and make a move that you’ll regret later. Continue to save for retirement and check in on your portfolio periodically to keep tabs on your progress.

“At least every year or in volatile markets, investors should examine their allocations to make sure they are still in line with their targets,” says Farmer. “For example, many investors in the spring of 2020 had the opportunity to trim bond fund exposure and add back to weakened equity allocations. Rebalancing should be done at least annually.”

This story was originally featured on Fortune.com

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