Buzz
As the pandemic persists, many companies are being forced to make tough financial decisions, and unfortunately, it's the employees who often bear the brunt. A new MagnifyMoney report indicates that workers could lose up to $13 billion in retirement plan contributions in the coming year as employers suspend their matching programs.
Whether you are just beginning your career or nearing retirement, missing out on a year of 401(k) matches can be a significant blow to your retirement savings. We consulted with experts to discuss ways to lessen the financial impact.
Consider increasing your 401(k) contributions
If you haven’t had a pay reduction—and there’s still some flexibility in your budget—you might think about increasing your retirement plan contributions. However, before making these adjustments, Mark Reyes, a certified financial planner and financial expert at Albert, recommends ensuring your emergency fund has at least three months’ worth of living expenses. Once that’s covered, you can reassess your budget to see if you’re able to allocate more towards retirement. 'As a general rule, you should aim to contribute 10-15% of your income to your retirement account. If you can contribute more, that's even better,' says Reyes.
Consider taking on a side hustle
In recent years, side hustles have grown increasingly popular. In fact, one-third of people started a side job to boost their retirement savings, according to a 2018 Betterment report.
'A key benefit is the chance it gives you to diversify your income. Every extra dollar makes a difference,' says Andrew Westlin, a senior financial planner at Betterment. Earning extra money could help you increase your 401(k) contributions, closing the gap in your savings.
Make the most of your employee benefits
If you're not fully utilizing your company’s benefits package, you could be missing out on simple ways to save extra money. For example, you may have access to a flexible spending account or a health savings account, both of which can help you save on medical or dependent care costs. 'Money saved through other benefits can be redirected towards your retirement contributions,' says Reyes.
