What Should You Do If Your Employer Suspends Your 401(k) Match?

Carrie Schwab-Pomerantz on

Dear Carrie: My employer recently stopped offering a 401(k) match. I've always tried to contribute enough to get the entire match, but now I am in a bit of a cash crunch and wonder if it makes sense to keep contributing. Is it still worth it? -- A Reader

Dear Reader: You've probably heard me say many times that specific financial advice depends a lot on your individual circumstances. And this question certainly fits that category.

The pandemic has had a major economic impact on employers as well as individuals. According to a national survey by the Plan Sponsor Council of America, more than 20% of large organizations had already suspended matching 401(k) contributions as of April. So, you're not alone, and I'm quite sure millions of Americans are asking themselves the same question.

To me, saving for retirement should be a universal priority. The beauty of a 401(k) is that it offers tax advantages and makes regular contributions seamless. Having a match on top of that is icing on the cake -- but not having it doesn't negate the other benefits.

Here's where your own circumstances come in. When money is tight, you may have to rethink and reprioritize. You don't want to jeopardize your future, but you also don't want to make imprudent decisions, like racking up a huge credit card bill or defaulting on other commitments, in order to continue contributing.

On the other hand, if your budget still allows you to make regular contributions, you definitely should. In fact, as counterintuitive as it may seem, now could be the time to increase your contribution to make up for the lost match. (It's possible you've been undercontributing all along!)


It's kind of a balancing act. So before you make a decision, there are a number of things to consider.

Start With These Questions

While your present situation always impacts the way you plan for the future, in times like these, you may need to take an even closer look. For instance:

-- How stable is your job? When the company you work for, whether large or small, is looking at its balance sheet to find ways to economize, you want to be realistic about the future of the company. Are there layoffs ahead? Will there be a cutback in hours? If you think your position could be impacted, now's the time to make sure you have enough cash on hand to make it financially if your job situation changes. Which brings me to the next point.


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