Here’s a story near and not so dear to my heart titled, How Much You Lose When Your Employer Cuts Your 401(k) Match
It hit close to home because a few weeks ago I received an email from my corporate masters informing me that 401(k) matching contributions were “on hold indefinitely” so as to provide the flexibility required to “navigate these unprecedented economic times.” This was a week after they announced that there would be a wage-freeze and bonuses “across the board” would be eliminated.
I’m not alone, it would seem.
The article provides some depressing figures on just how much less you have at retirement without an employer match. It seems a little like a WAG to me because there are A LOT of assumptions involved like average rate of return, whether the employee will stop contributing to his 401(k) altogether, etc.. but the article does outline 3 actions an employee faced with the elimination of his company’s match can take:
1. Save more.
2. Consider a Roth IRA.
3. Don’t cash out.
What would you do? (Read the details of each action here)
Me? I opted for #1. It wasn’t as hard a choice as I thought it would be, since the market had pretty much bottomed out by the time I had to take action. I like the idea of buying more stocks at what I’m sure will have been historic lows by the time I retire. So I jacked up my contribution rate to what it was with the employer match included. Still, I wish I had that match…
[...] workers, like myself, saw their company contributions to 401(k) plans cut or “temporarily” suspended. My response to that was to give my 401(k) some TLC, a move [...]