By now, you may not be feeling so hot about your 401(k). We hate to give you yet another reason to feel that way, but it must be said. Companies that have been hard-hit by the pandemic are considering ending the 401(k) match program for employees retirement funds.
Many companies match an employee’s contribution to their retirement savings accounts up to a certain percentage of income. They bill this as “free money,” only that money is put into the stock market or market-based funds. This “free money” has mostly disappeared as the stock market has nosedived as of late, and employers can scarce afford this “free money” any more anyway.
No companies have publicly announced this, but financial advisors are warning investors that it could happen soon. We have never been huge fans of the 401(k) to begin with, but if you believed that this was your lifeline, you are about to see how life-saving it can be – or not be. Advisors are now saying that pausing your contributions is not such a bad idea, which is unprecedented shakiness from those who praise the 401(k) to near biblical proportions.
We’ve said it before, and we will repeat it. Set-it-and-forget-it investing is no way to wealth. The 401(k) is a mediocre investment took when it is at its best. And these days, it is not at its best.