Many companies have had to reduce expenses to retain employees during the pandemic. To save money, some companies paused matching contributions to employee 401(k) plans. If this happened to your 401(k), do not panic. Keep with your existing retirement strategy and consider the following options.
DON’T STOP
If your job feels secure and you’re still financially able, continue making contributions. Don’t stop just because your employer temporarily did. The tax benefits and the potential for growth are still there.
SAVINGS BECOME CONTRIBUTIONS
Perhaps you’ve cut back on spending because you’re not going to the gym or the dry cleaner as often. Contribute the money saved to your retirement plans. This may help make up a portion of the lost employer contribution. And for an added bonus, some contributions, like those to a traditional IRA or 401(k), may be tax deductible.
REVISIT YOUR ALLOCATION
With all the turmoil in the markets, now’s a good time to review your portfolio allocation. If you’ve incurred significant losses, look to ensure your current investment strategy makes sense. Avoid making hasty decisions. Instead take a detailed look at your current situation and reevaluate your future needs. And if you’re unsure of what to do, have a conversation with your financial and tax professionals.