I’ve written extensively about why more and more experts are warning that the 401(k) is an experiment that’s failed, and why the man considered to be the “father” of the 401(k) says it’s a monster that should be destroyed.
But the pandemic, shutdown and resulting economic downturn have exposed dangerous cracks in the 401(k) system. I’ll explain three of them here and show you how to protect yourself…
New 401(k) Problem #1: Companies are Suspending Matching Contributions
Tens of millions of workers have already been affected, and more companies have announced their plans to suspend the 401(k) match.
That’s a real blow for employees who’ve come to think of the match as “free money” and assumed it’s a perk that won’t be yanked with little warning.
But the reality is that the employer match isn’t really “free money” at all. According to a study by the Center for Retirement Research, for every dollar an employer contributes to your 401(k) match, they pay 90 cents less in salary to men and 99 cents less to women!
Translation: For every matching dollar you’re given, you really only receive 10 cents or less in total compensation. [Read more…] “Coronavirus Pandemic Exposes Cracks in 401(k) Plans”