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Some companies rethinking 401(k) matches

Posted June 29, 2009
Updated October 12, 2011

— A growing trend could make your 401(k) retirement account shrink.

When to ditch your 401(k) When to ditch your 401(k)

A survey by Grant Thornton LLP’s found that 29 percent of U.S. companies have modified, or plan to modify, the matching contribution in their 401(k) plans this year; two-thirds of those respondents report that they will eliminate the match entirely.

It is something WRAL's GOLO online community has taken note of.

"My workplace stopped 401(k) matching too. That's the injury. The insult is the market loss we've all seen," a person wrote.

Another person added sarcastically, "I am going to invest in cardboard. Retirement age people are going to be living in boxes soon."

To help ward off retirement money problems, "You should have a personal portfolio equal in size to what you have in a retirement account,” financial planner Troy Smith said.

Smith says if an employer stops matching 401(k) contributions people should look at their overall portfolio before deciding what to do next.

"The first thing is to take a look at what you're already doing outside of the retirement account. So if you've already got sufficient liquidity in investment account, some savings, and emergency funds, plus additional investments equal to what you've got in your retirement account, then keep contributing to your 401(k),” Smith said.

Smith says people should stop contributing if they don't have at least about three months of living expenses available in an emergency account.

"If the employer is taking away the match and you have no other lifeline outside the 401(k), discontinue the 401(k) until you can build up the emergency fund,” Smith said.

Smith also said having three months worth of emergency funds in a savings or money market account is crucial for any successful financial plan.


This story is closed for comments.

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  • ObamaMustGo aka NCcarguy Jun 30, 2009

    Why worry, The government will take care of us all!!! CHANGE YOU CAN BELIEVE IN!!! lol

  • Pseudonym Jun 30, 2009

    You're not forced to contribute to a 401(k), but it is a smart thing to do. I agree with you, it's your money, do what you want. That's why Social Security is a HUGE problem.

    Also, since it is your money, if you find yourself out of money at age 66 because you were foolish with it when you were younger, don't go to Mommy Obama-Gubmint crying for more.

  • fanzalive Jun 30, 2009

    So if they no longer have to match 401K's then are we goign to not be forced to have to put 6% per paycheck into a 401K? I think this is silly anyway. I mean it is my money, if I choose to save great, if not then that is my problem. But now if I am not getting matched what's my incentive?