The future of technology and your 401(k) – Press and Guide
The value of most technology stocks fell off a cliff last year. Many experts believe rising interest rates, which essentially put an end to the days of borrowing cheap money, fueled the downfall. But, while the value of technology stocks may be down, technology is a vital part of our everyday lives. To dismiss its importance would be a mistake.
Wearable technology, for example, is just in its infancy. My wife recently became aware of a health issue thanks to her watch. As a result, she saw a doctor and, sure enough, the watch’s information was spot on.
The doctor was quite surprised that the watch’s diagnosis was accurate. And pleased he could quickly nip a potentially harmful health issue in the bud.
Many people have devices implanted that continually monitor their hearts. I could go on and on pointing out links between health care and technology, but the important point is that there is a link. And no matter what stock prices do in the immediate term, technology is not going anywhere.
When I was travelling over the holidays, I stopped at a fast food restaurant. I was a bit surprised that there was no friendly face behind the counter waiting to take my order. Looking around, I realized that orders were placed at one of three high-tech touch screens against a wall. The prompts were simple and I easily navigated the menu and placed my order.
Toward the tail end of my trip, I was at a casual restaurant where I didn’t even have to pull out my wallet to pay the bill. All I needed to do was scan the code on the bill with my mobile phone.
Technology is clearly a big part of our everyday lives, and as the world becomes more complex we’re going to see many more innovations.
I frequently discuss utilizing company sponsored 401(k) programs for retirement. Besides the fact that you’re saving on a regular basis, I also like that the 401(k) administrators are very responsible record keepers. These company sponsored retirement programs require detailed record keeping for both the participant and the employer.
The ongoing discussion and debate over student loan debt could make record keeping even more complex. That’s because many who carry a heavy student loan debt burden have chosen not to participate in company sponsored retirement programs. Their priority, instead, has been to pay off the debt. Which meant they’ve had to put saving for retirement on the back burner.
Many companies have an employer match. For example, some may match employee contributions dollar for dollar up to 5 percent. The IRS recently made a private letter ruling that affects employees who paid off their student loan debt instead of contributing toward retirement. It allows the employer to match the amount the employer paid off.
Though the ruling may be well intentioned, my initial reaction is that it just adds to the complexity of record keeping. I believe a likely result will be additional administrative costs for retirement programs.
Summing up, although technology stocks generally took a beating in 2022, I think technology will continue to be a vital part of our everyday lives. I wouldn’t be too quick to dismiss the technology positions from your investment portfolio. And stay with your 401(k).
Email your questions to kenmorris@lifetimeplanning.com
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Society for Lifetime Planning is not affiliated with Kestra IS or Kestra AS. https://kestrafinancial.com/disclosures
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.
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