Recession’s Next Casualty: 401k Matching Contributions
A new trend is afoot in the halls of some of America’s largest corporations. In addition to laying workers off, many companies have been cutting back or eliminating matching 401k contributions altogether. While the workers affected are undoubtedly just happy not to have been laid off, this phenomenon represents yet further deterioration in the nation’s senior safety net.
If Workers, Employers, And The Government Aren’t Saving, Who Is?
This couldn’t possibly come at a worse time. We already know the Social Security system is in serious trouble under the pressure of wave after wave of retiring baby boomers, the federal government is running massive deficits, and workers themselves aren’t saving much money. For many workers, that 2-3% company match represents a large portion of their yearly retirement savings. Take that a way, and trouble is on the horizon for many American workers.
The problem is, Americans just aren’t as good at being responsible for their own retirement as the creators of the 401k system envisioned. Far from encouraging prudent fiscal planning, the 401k debacle has merely angered workers used to their “free” retirement check from their employer and the government every month. This leaves us at an impasse, because clearly the cradle-to-grave employment/pension model from decades past is unsustainable. Just as clearly, the 401k system in its current incarnation is also unlikely to provide for our nation’s retirement needs.
New methods are needed to encourage workers to save on their own, but a viable safety net is also necessary. I have a few ideas which I’ll formulate in a future post, but what do you think? How should we go about saving our nation’s retirement in the face of our current difficulties?
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Saving for retirement is great, but this is not the best time for that. This is a time to focus on getting out of debt and reducing expences and increasing savings – all of which will help position you for retirement.