If you have a 401(k) match from your employer, thank your lucky stars. As the pandemic continues, more companies are looking to reduce expenses, and those matches are typically among the first to go. Here’s what to do should that ever happen to you.
Resist the urge to panic when the cuts begin. Try to focus on the bigger picture. As US News notes, remember that 401(k) match cuts happened during the Great Recession and they eventually came back. Keep in mind that these cuts might make it easier for your company to keep you employed. A job with reduced retirement plan matches is better than no job with no retirement plan.
Look Into a IRA
Now might be a good time to consider a Roth IRA or traditional IRA. A Roth IRA might be a great move if you have time on your side — you pay taxes on contributions now, but when you take withdrawals in retirement it’s tax free. Putting money into a Health Savings Account if you’re eligible can help you save on taxes as well.
Review your budget immediately after you take this negative financial hit. Make sure you have enough money for essentials, like your rent or mortgage, groceries and utilities. If things are tight, you might want to temporarily reduce your 401(k) contributions. If things appear okay, see if there are ways to reduce expenses, then use that extra cash to invest more in your retirement accounts. Anything you can do to keep contributing to your golden years will help you overcome this downturn.