Regardless of what’s going on in the economy and the stock market, do not stop funding your 401(k) accounts!
Most workers with 401(k) plans have viewed their retirement savings as having trickled away with the current stock market plunge. In addition, 25% of US employers have or are planning to eliminate 401(k) matching contributions as a way to make it through these difficult economic times.
87% of those polled felt the companies matching feature was an important motivation for them to contribute to their 401(k). Without the match, there’s less motivation to contribute.
These two facts have prompted some individuals to stop contributing to their 401(k), which is exactly the opposite of what they should do.
Income in retirement comes from Social Security, (which has some significant issues going forward), pension income (which most come is no longer offer) and from resources saved during one’s working years (401(k), IRA, Roth IRA Sep IRA etc.)
The 401(k) is a great way to accumulate retirement dollars because;
1. The deposits a comes right out of the check and is deposited automatically,
2. There is usually a good choice of investment types
3. It is easy to administer
4. You save current income tax.
Now is a crucial time to make sure that your investments within your 401(k) are appropriate for your risk tolerance, you risk capacity and your goals including timeframe. Once you make sure you have the right allocation continue funding your 401(k) so that you’re more likely to have the retirement you envision.