Key Takeaways
- Unexpected expenses are something no one enjoys, but they’re a fact of life.
- Some employers are ceasing 401(k) matches, due to difficult times brought about by the pandemic.
- There are some things you can do to account for the loss of an employer match to your 401(k).
Needing emergency dental work. Suddenly getting a flat tire and finding out you need to replace all four tires. Having your furnace go out during the middle of winter and paying to install a new one. Most of us have experienced these or other unexpected expenses, and they’re never fun.
Another such unexpected money situation some people are encountering these days is finding out their employers will no longer contribute matching funds to their 401(k)s. Employers who are seeking cost-cutting measures, due to the toll the current pandemic is taking on their bottom lines, may decide to cut their matching programs.
Perhaps you’re in this situation and were previously on track, saving first and spending second. You may have been saving your 15%. Now, you’re suddenly only saving 10% or 11% because that match is gone. What can you do? Well, let’s consider three possible steps you can take to get you back up to 15%.
First, you could take your next salary increase and put the entire increase into your 401(k). Think of that 3% – 4% increase as money you won’t miss and use it to get you back to the level of savings you’re aiming for.
Second, take a look at your expenses and consider where you might be able to spend less. Perhaps you take an annual vacation that costs $2,500. This year, you may exchange that for a staycation and spend $500 instead. You would then have an extra $2,000 to put away – plus the added bonus of discovering some fun things about your city or town that you might not have otherwise experienced!
Finally, there’s the third option of getting a side gig. A lot of people are finding they have more time these days, given that they’re working from home and not spending time commuting. Plus, there just aren’t the same time commitments to social activities that there used to be. If you have extra time, then a side gig might be a way to make a little extra money that you could then put away.
So if you’ve found yourself dealing with the shock of your employer taking away your 401(k) match, consider taking one or all of these steps to help manage the pain of that shock and get you back on track with your savings goals. Until next time, enjoy.