Edited for brevity and clarity by Gleba & Associates. Originally written by Susan Tompor, Detroit Free Press, June 17, 2020.
The economic upheaval witnessed in 2020 could shake up things even more when it comes to 401(k) plans.
A small group of employers, including many in hard-hit industries such as retail, already have ratcheted down or eliminated some matching 401(k) contributions for employees during the latest recession.
Monroe-based La-Z-Boy, for example, announced in late March that it would freeze its 401(k) match. Fiat Chrysler Automobiles trimmed some benefits in a cost-cutting measure, too.
Other employers have made similar moves.
About 12% of 816 employers surveyed by Willis Towers Watson, had cut their matching contributions to retirement plans as of the week of April 20 when the survey was done. All the respondents employ 12 million people.
Cuts could be temporary
Some of these moves, fortunately, may only be temporary at some companies.
Fidelity Investments held a client webinar June 4 and discovered that 9.6% of the 302 participating employers reported that they have reduced or suspended the match.
However, according to Fidelity, 55% of the employers that reported limiting or cutting the match said they have active plans to reinstate the match in the future.
Many employers, including Ford Motor, have not suspended the 401(k) match that they currently offer.
Rethinking your contribution
Many times, it makes perfect sense to contribute enough money into your 401(k) plan to capture every matching dollar offered by the company. Not surprisingly, people tend to save more when there’s an incentive.
And it could make a good deal of sense to continue saving money in your 401(k) plan even without matching contributions. You’re still getting a tax break upfront for traditional contributions as you’re able to set aside part of your pay before federal and state income taxes are withheld.
But if you’re dealing with high-cost credit card debt or mounting student loans, you might be better able to use some money you would have set aside for retirement savings toward paying down debt now. Basic budgeting may require you to make some adjustments, too, if you’re facing a pay cut or a temporary layoff or furlough.
In general, though, she says contributing to a 401(k) remains a solid way to save for retirement.
“The loss of a match only increases the need for maintaining or growing your personal savings rate,” Joy said.
Invest Well. Manage Well. Live Well.
Gary is a Financial Associate at Gleba & Associates, Inc., joining our team in June 2020. After graduating from Walsh College with a Bachelor’s Degree in Finance in 2013, he began his career at Raymond James Financial Services. He then moved to the world of banking, working as a banker with Chase Private Client and then as an Assistant Vice President, Financial Advisor with PNC Investments. Gary has expertise in all aspects of financial planning including investment management, higher education planning, life insurance, and long-term care insurance needs analysis. When he gets away from the office, he loves to spend time with his wife, Lauren, and two daughters, Hadley and Harper. He enjoys woodworking, boating, summer weekends at the family cottage, spending time outdoors and traveling.
Conor is a Financial Associate at Gleba & Associates, Inc., where he started in 2018. Conor has prior experience in the financial planning industry, as well as in the insurance industry. His high level of understanding insurance and financial products helps him in assessing the needs of our clients. He holds a Bachelor of Science degree in Business Administration with a concentration in Finance from the University of Detroit Mercy. You can often find Conor playing soccer or walking with his two dogs Milo, and Ellie. He is also an avid follower of the Detroit Tigers, Detroit Red Wings and his alma mater, the University of Detroit Mercy Titans.
Lorie Heitzer is our Financial Associate at Gleba & Associates, Inc., where she has been a valuable employee for more than a decade! In her current role, Lorie assists with client reviews, implements client financial planning, and handles preparation of investment paperwork. During her time with Gleba & Associates, Lorie has earned her Series 6 (Investment Company Variable Contracts Representative), 63 (Uniform Securities Agent) and Life Insurance Licenses, allowing her to move into her current role where she assists clients in both of these areas. Lorie and her husband Bill, along with their daughters Lauren and Alexandria, and sons-in-law, Andrew & Joe, enjoy golf and make it a family event whenever possible. Her tenure at Gleba & Associates speaks volumes to her passion for the firm’s family atmosphere and her dedication to our clients and their financial and insurance needs.
Terri is the Service Manager at Gleba & Associates, Inc., Joining the team in April, 2015. In her role, she handles client service requests and underwriting. Terri’s previous experience in 401(k) Retirement Plans, Payroll and Human Resource Administration is invaluable, allowing Gleba & Associates to grow and run efficiently. This is knowledge that can also assist our small business clients as they grow their businesses. Terri enjoys spending time with family, which includes her husband, Gerry and her two children, Vincent and Genna. She loves the outdoors and camping with family in their RV. Terri looks forward to continuing the high level of customer service you have come to expect from Gleba & Associates!
Michael is the Marketing Manager at Gleba & Associates, Inc., where he began in August 2017. In his position, Michael creates and develops marketing strategies to enhance the image of Gleba & Associates, and helps maximize the Client-Advisor relationship. He is also in charge of company events, seminars, and educational workshops. Michael has a Bachelor of Applied Arts Degree in Integrative Public Relations from Central Michigan University. When he is not in the office, Michael can most likely be found playing billiards, playing poker, on the tennis court, or rooting on the Utica Unicorns baseball team. Michael stays active by going to the gym and going to the dog park with his Labrador-mix, Milton. His approachable attitude, along with experience in marketing, communications, and social media, makes him a valuable asset to the Gleba & Associates team.
Moiz is our Financial Associate at Gleba & Associates, Inc., where he began in 2013 after working for Bank of America and Thomson Reuters in various financial roles. In his position, Moiz assists in the research of financial solutions in order to meet client’s needs, conducts client reviews, provides insurance quotes, offers detailed financial plans, and delivers follow-up services to our clients. Before moving to the United States in 2004, Moiz grew up in rural India, where he was raised in a family of entrepreneurs. This allowed him to quickly learn the value of financial investment. Moiz holds a Bachelor of Commerce Degree in Accounting from Gujrat University and a B.B.A. in Management and an MBA from Walsh College of Accountancy and Business Administration, where he was elected as a member of Delta Mu Delta, the International Honor Society in Business Administration in recognition of high scholastic attainment. Moiz enjoys spending time with his wife, Tasneem, son, Taha, and family. He also loves playing tennis and rebuilding computers. His expertise in the areas of banking, mortgage and taxation helps to provide our clients with distinct portfolio advice as well as overall financial direction and growth.