You invest in retirement accounts to make your money grow over time, but it doesn't always work out that way. When you notice that your retirement assets are losing value, your first instinct may be to panic and sell everything, but this usually isn't your best option. Here are four things you can try to get your savings back on track.

1. Make sure your investments are well diversified

The first thing you should do if your investments are losing money is to check that your portfolio is well diversified. If you have all of your retirement savings tied up in one or two stocks and their values plummet, it's a more serious issue than when you're invested in 100 things and one or two of them dip in value.

Man with head on table in front of falling stock chart

Image source: Getty Images.

Diversification is partly about the number of assets you're invested in and partly about the types of assets and sectors you're invested in. You want to spread your money among many stocks, bonds, and other investment products so that you don't have too much in any one thing. That way, if the value of one of your assets takes a hit, it won't have such a dire impact on your portfolio.

If you don't have a lot of money to purchase individual stocks and bonds, consider mutual funds and exchange-traded funds (ETFs). These are groups of stocks, bonds, and other investment products that you purchase as a package, and they're a convenient and affordable way to quickly diversify your portfolio.

You also need to think about the type of assets and sectors where you're putting your money. Ideally, you want a mix of investments whose returns typically don't move together, like stocks and bonds. This way, when the value of your stocks are down, the value of your bonds will likely be high, and vice versa. You also don't want to invest too heavily in one industry, like technology. If it has a financial crisis and all of your money is there, your portfolio could still lose value, even if you're invested in many different assets in that industry.

If you suspect a lack of diversification is partly to blame for your retirement savings taking a hit, then you should correct this issue. Make sure you're not too heavily invested in one particular sector or asset. If you are struggling to figure out how to properly diversify your investments on your own, you may want to bring in a financial advisor to offer tailored recommendations based on your unique situation.

2. Ride it out

If you're young and your investments are well diversified, the best thing to do when you see your retirement accounts losing value may be nothing at all. All investment products have their ups and downs, and it's never a good idea to judge their long-term growth potential by their performance over the last few months. Even if your investments take a hit in the short term, it's possible that their value will come back up again long before you need the funds in retirement.

Unless you think that the investment is no longer appropriate for your goals or you have reason to question its long-term stability -- for example, if you own stock in a company that keeps losing market share to its competitors -- you're better off making no changes to your portfolio. Continue making contributions as you were and don't get too hung up on a short-term dip in share prices. This could actually benefit you in the long run if you purchase a large number of shares when prices are low and they later rise.

3. Move your money to more-stable investments

If you're nearing retirement age and you see your savings declining, you may not be able to wait for the value of your assets to rise again before you need to begin drawing upon that money. When you withdraw large sums to cover your living expenses, you're reducing the amount left in your account that can compound when your assets do recover.

In this case, you're better off moving more of your money to more-stable investments like bonds. When you buy a corporation's or a government's bonds, you're essentially lending money to that entity, which it promises to pay back over time with interest. The only way you wouldn't be repaid would be if the entity defaulted on the loan, which doesn't happen often -- unless you're talking about junk bonds, which are high-risk bonds involving entities with poor credit.

Another option for the conservative investor are low-volatility ETFs. These are known for experiencing fewer ups and downs than most ETFs. Usually, such ETFs call this out in their names, as "low volatility" or "minimum variance" ETFs.

These investment products may not provide as large a return as stocks, but they also tend to be more stable over time, so there's less risk of them losing a lot of their value and crushing your retirement savings.

4. It's sometimes possible to get a tax deduction, but may not be worth it

The government does allow you to claim a tax deduction if your retirement accounts have lost value, but there are certain rules you must follow. First, you must have basis. In this case, basis refers to nondeductible contributions you've made to retirement accounts. Deductible contributions -- those that reduce your taxable income in the year of the contribution -- do not count. You haven't had to pay any taxes on that money so far, so the government is not going to give you a tax deduction on the amount that you lost.

You also must close all of your retirement accounts of the same type in order to calculate the loss. This means that if you're trying to claim a loss on your IRA, you must close all of your IRAs. Then, you total up the amount of your nondeductible contributions to the accounts and the current value of the accounts, and you can write off the difference if the current value of the accounts is lower.

But this is inconvenient for two reasons. First, if you withdraw money from your retirement accounts before age 59 1/2, you will be charged a 10% early withdrawal penalty. This may negate some of the benefit you get from writing off the loss. Second, if you take the money out of your retirement accounts, then you're giving up the tax advantages that these accounts offer and your money will no longer grow as quickly, unless you invest it in something else.

For these reasons, it's not wise to claim a tax deduction on a retirement-account loss unless you're over 59 1/2 and you plan to use the money to cover your retirement expenses in the near future anyway. Otherwise, you're better off trying one of the other suggestions above.

You can't control the markets, but by understanding how they work and avoiding impulsive decision making, you can handle temporary dips in the value of your retirement assets.