Types of Risks in 401(k) Retirement Portfolios
- Market Risk
- Stock market downturns can reduce account balances.
- Diversification and allocation strategies help mitigate these risks.
- Inflation Risk
- Rising costs erode purchasing power.
- Including inflation-protected securities or real assets can provide balance.
- Longevity Risk
- Retirees may outlive their savings.
- Risk-managed annuities or conservative withdrawal strategies are common tools.
- Compliance and Fiduciary Risk
- Employers must comply with ERISA, DOL (Department of Labor), and IRS guidelines.
- Implementing compliance management systems USA helps maintain legal protection.
- Operational Risk
- Errors in contributions, recordkeeping, or vendor management.
- Strong vendor oversight and treasury cash management USA practices reduce risks.