This week’s CBTV show is entitled, “Does your 401(k) plan got you down? Don’t stop believing or putting money into it!” If you have a 401(k) plan with your employer, I think you’ll find the following information interesting.
In 2008, at the height of the recession, many employers discontinued their 401(k) matching contributions as a means to trim costs without having to lay off any of their workforce. According to the Profit Sharing/401(k) Counsel of America, about 20% of U.S. employers with a 401(k) or profit sharing plan either reduced or suspended their contributions to the plan during 2008 through 2010. Major employers such as Federal Express, MGM Resorts and GM are a few of the corporations that put their 401(k) matching contributions on hold. Now, it appears these temporary cuts are coming to an end for many of these employers; however, while they’re reintroducing their 401(k) matching programs, they are coming back with some modifications to the former plan.
Prior to the recession, the typical 401(k) benefit had employers matching 50 cents of every dollar their employees set aside in their retirement accounts, up to 6% of the employee’s annual salary. Now, most reinstated matching plans have a yearly cap. MGM Resorts, for example, stopped matching contributions to employee 401(k) accounts in 2009 and 2010, but has since, reinstated their matching program with a maximum of only $500 for the year. UPS reestablished their matching program, but set a cap of only 2% of the employee’s annual pay.
So, what does this all mean to you? Very simply this – You can’t depend on your employer to help you secure a comfortable retirement in the future. It’s up to you! You remember the 8 great words of life: “If it’s to be, it’s up to me!”
So, become more determined than ever to spend LESS and save MORE now, so you can secure a financially independent future. Increase your monthly contributions into your 401(k), IRA or any other retirement plan you may have. Build up your commitment to saving to 10% to 15% of your net take home pay. Your future “self,” will be glad you did!
- Matt
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