What to Do If Your Company Stops 401 (K) Matches
In the midst of the raging pandemic, many companies were forced to make tough decisions to cut costs, and, unfortunately, workers were the hardest hit. Employees could lose $ 13 billion in retirement contributions over the next twelve months as companies suspend programs, according to a new report from MagnifyMoney .
Whether you’re starting your career or approaching retirement, losing 401 (k) matches in a year can be a serious blow to your savings. We spoke with experts about how best to minimize damage.
Try to contribute more to your 401 (k)
If you haven’t had a pay cut – and you have some wiggle room in your budget – you may want to consider increasing your pension plan contributions. However, before making these changes, Mark Reyes, a certified financial planner and financial advisor at Albert , suggests replenishing your emergency fund for at least three months of living expenses. After that, you can revise your budget to see if you can afford to save more in retirement. “Generally speaking, you want to deposit 10-15% of your income into a retirement account. If you can afford to contribute more, even better, ”says Reyes.
Consider tackling the side hustle and bustle
Over the past few years, side effects have become increasingly popular. In fact, according to a 2018 Betterment report , a third of people started earning money to supplement their retirement savings .
“The main advantage is the ability to diversify your income. Every dollar accumulates in the process, ”says Andrew Westlin, senior financial planner at Betterment. Making extra money can allow you to increase your 401 (k) contribution, which can narrow the savings gap.
Take advantage of your employees
If you are not getting the most out of your company’s benefit package, you may be missing out on some easy ways to save extra money. For example, you might have a flexible expense account or medical savings account that you can use to save money on medical expenses or the care of a dependent. “Money saved on other benefits can be used towards your pension contributions,” says Reyes.