Retirement Saving Harder For Some With Companies Eliminating 401ks
Saving for retirement might be a little harder since some companies are doing away with a popular benefit. NY1's Tara Lynn Wagner filed the following report.
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In the uncertain economy of the past few years, many companies found themselves tightening their belts and their budgets. One casualty seems to be in the benefits department, with 401ks bearing the brunt of the blow.
Looking at over 400,000 plans nationally, a study by American Investment Planners found that the number of companies offering to match employee contributions dropped by 7 percent from 2009 to 2011.
"And they haven't started it back yet," says Brett Goldstein of American Investment Planners, LLC. "Although, we don't have the 2012 information, so we don't know if the trend's going to start continuing up. But I think it's going to go down."
All told in 2011, 42 percent of companies didn't offer a match. Others terminated their plan altogether, and that's problematic, since Goldstein said many workers rely solely on those employer-sponsored plans when saving for retirement.
"Unfortunately, a lot of people live paycheck to paycheck, so this is their only source of retirement funds," Goldstein says. "People really don't have the money to do both an IRA and a 401k, or a 401k and something else."
Take that vehicle and it's perks away, and you've got an even larger population of people ill-prepared to finance their golden years, a span of time that he says is more expensive that you probably realize.
"Depending on your lifestyle, you need anywhere from $700,000 all the way up to about $2 million, factoring in inflation and health care, and that's just for an average person making about $50,000 or so," Goldstein says. "You need to do anything you can to really save for retirement."
His advice: if you do contribute to a 401k, keep tabs on it to make sure your money is working for you. And should your company K-O that 401k, don't let that decision derail your future. Roll the money over into another plan and keep saving.
"You really have to have your heart set on retiring and developing a retirement plan. Maybe there's something you always wanted to do in your retirement, and that's your goal," Goldstein says. "And I think right now, what people need to do is, they have to create a sense of urgency."