06/04/2020
YOUR EMPLOYER SUSPENDED ITS 401k MATCHING DURING COVID19. NOW WHAT?
If your employer has recently made an adjustment to its 401(k) offerings, you may be considering how this could impact your future retirement - and what next steps you should be taking.
1. Resist the Urge to Panic
You should be making decisions about your money with objectivity - not gut reactions and emotions heightened by media. Withdrawing any amount from your 401(k) now will only rob your future retirement. Unless you’re in dire need of financial assistance, this option should be avoided.
2. Talk to Your Financial Advisor
Your advisor’s sole responsibility is to help you make unbiased, educated and objective decisions about your money. How will you make up for the missing contributions? What financial impact will this change have on your future retirement? You likely have plenty of questions regarding this change to your 401(k) and talking to your advisor is the perfect place to start.
3. Revisit Your Portfolio & Other Retirement Accounts
If you haven’t already, use this as an opportunity to reevaluate your current asset allocations and investment strategies. Your advisor may be able to help you identify potential areas for improvement based on your current tolerance for risk.
4. Increase Your Own 401(k) Contributions
While your employer may have slashed matching contributions, that doesn’t mean you still can’t contribute to your 401(k). If you have the means to do so, consider upping your contributions, for now at least, to help offset the loss of any missing contribution matches.
Remember, the contribution limit for a 401(k) increased in 2020 to $19,500. If you’re over 50, you’re allowed to contribute an additional $6,500 in catch-up contributions.
If your employer recently suspended its 401(k) matching contributions, it’s likely this is a temporary cut in benefits. Even so, every penny counts when it comes to preparing for retirement. Work with your financial advisor to understand the impact this may have on your future retirement earnings and what you should be doing right now to make up for any lost funds.
