Saturday, December 29, 2012
More Threats to Retirement Savings
And the threats to our 401(k) system just keep coming. The latest news comes from IBM which beginning in 2013, will delay 401(k) matching contributions until Dec. 31. That way workers leaving the company before that date will get no match – unless they have formally retired. The move is expected to translate into big savings for IBM which is good for the company and shareholders but potentially bad news for some workers’ retirement accounts. Experts say it’s likely more companies will follow suit.
News like this should give us all a wake-up call – that we alone are responsible for our retirement. If we don’t take charge of our financial future and take steps to guarantee a secure retirement, who will? If we’re fortunate enough to have a workplace retirement program, we need to take full advantage of it. And we need to start early so we have the benefit of compound interest working for us over the long term.
Finally, we need to work to protect the 401(k) system. Congress has begun working on tax reform – and the outcome could affect our 401(k) plans. The last time Congress passed tax reform in 1986 it cut the 401(k) contribution limit by 70% resulting in a mass termination of plans. And guess what? Proposals are already being considered by lawmakers to cut the 401(k) contribution limit again. If that happens, the retirement security for millions of Americans will be jeopardized and the results would be disastrous. Visit www.savemy401k.com to learn more.