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.
DONT STOP
If your job feels secure and youre still financially able, continue making contributions. Dont stop just because your employer temporarily did. The tax benefits and the potential for growth are still there.
SAVINGS BECOME CONTRIBUTIONS
Perhaps youve cut back on spending because youre 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, nows a good time to review your portfolio allocation. If youve 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 youre unsure of what to do, have a conversation with your financial and tax professionals.