Recs

1

Use This to Rescue Your Retirement

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

For years, workers have relied on their employers to help them build a path toward a comfortable retirement. After a few potholes during the financial crisis, companies are now starting to answer that call once more -- and smart workers can take advantage of their willingness to help them rescue their retirement while that help is still available.

Over the past two years, many workers could point to their employers cutting back on employee benefits, including those related to retirement. In particular, the money that many employers provide to encourage participation in 401(k) plans -- known as employer matching -- disappeared in many cases. But despite many high-profile companies that had to cut benefits, including American Express (NYSE: AXP  ) , General Motors (NYSE: GM  ) , and Eastman Kodak (NYSE: EK  ) , it now appears that many employers were able to stay the course. And even among those that didn't, many -- including AmEx, GM, and Kodak -- have reaffirmed their commitment toward their workers' financial health by restoring those matches.

A depressing history
When it comes to workers and retirement, the move in corporate America over the past few decades hasn't been great for employees. Past generations could expect long careers with a single employer as well as a healthy monthly pension once they decided to retire. Combined with income from Social Security, an employer pension allowed many workers to retire with little or no savings of their own to enjoy at least a modest lifestyle.

Over time, however, many employers have moved away from traditional pension plans toward retirement savings vehicles that require employees to take much more responsibility for their own financial well-being. Retirement plans like 401(k)s, which require workers to make their own contributions from their paychecks in order to fund their retirement, put workers in the position of having to choose investments that will let them reach their financial goals. And if a bad market environment -- like the one we've seen over the past decade -- gets in the way, then workers are the ones left holding the bag.

As a consolation prize of sorts, workers often receive a matching contribution from their employers when they put money into their 401(k) accounts. But to add insult to injury, some employers took away their match during the financial crisis -- leaving workers to face the double-whammy of plummeting account balances as well as disappearing matching contributions.

The new reality
The good news is that this trend isn't as bad as many had feared. According to a recent survey by the Profit Sharing/401(k) Council of America (PSCA), around 80% of employers either left their matching contributions unchanged or actually increased them between 2008 and 2010. Among the remaining 20% or so that made cuts, over a third have already restored their matching.

Ford (NYSE: F  ) is a good example of the phenomenon. In late 2008, the company appeared to be in serious financial trouble. In response, it implemented a number of cost-cutting measures, ranging from cutting benefits to suspending merit-pay raises and bonuses and laying off workers. By early last year, the company realized that both financially and from a morale perspective, restoring the lost match was the right move.

Not every company has been able to get back to normal, however. At least as of August, despite improving economic conditions, Unisys (NYSE: UIS  ) and Honeywell (NYSE: HON  ) hadn't restored their matching contribution cuts. Sonoco Products (NYSE: SON  ) did a partial restoration, dropping from a 100% match on 3% of pay to a 50% match on 4% of pay, amounting to a 1-percentage-point decline.

Stay engaged
Employer matching is a key attribute of a 401(k) plan and makes a huge difference in whether workers participate. But even if your employer backs away from its obligation to you and other workers, you need to stay aware that when it comes to saving for retirement, you're the one who needs to do the heavy lifting. Don't give up on your 401(k) just because matching goes away; it may remain the best tool you have in retiring comfortably.

The right stocks can make it a lot easier to retire rich. Click here to get some great investing ideas from the Motley Fool's free report, 5 Stocks the Motley Fool Owns ... and You Should, Too.

Fool contributor Dan Caplinger is trying to stay on track despite getting slammed by snowstorms. He doesn't own shares of the companies mentioned in this article. American Express and General Motors are Motley Fool Inside Value recommendations. Ford Motor is a Motley Fool Stock Advisor selection. Sonoco Products is a Motley Fool Income Investor pick. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy keeps the trains running on time.


Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 18, 2011, at 8:23 PM, TMFGalagan wrote:

    Thanks to many of my readers for giving me updated information that Unisys has reinstated an employer match effective Jan. 1, 2011. From an SEC filing:

    "The company has announced that effective January 1, 2011 that it will reinstate a company match to its U.S. 401(k) Savings Plan, which had been suspended effective January 1, 2009. The company will match 50 percent of the first 6 percent of eligible pay contributed to the plan on a before-tax basis (subject to IRS limits). The company expects to fund the match with the company's common stock and estimates the cost of such match will be approximately $14 million in 2011."

    best,

    dan (TMF Galagan)

Add your comment.

DocumentId: 1424542, ~/Articles/ArticleHandler.aspx, 4/16/2014 3:07:49 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

Today's Market

updated Moments ago Sponsored by:
DOW 16,400.51 137.95 0.85%
S&P 500 1,858.85 15.87 0.86%
NASD 4,073.38 39.22 0.97%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

4/16/2014 2:47 PM
AXP $87.21 Up +1.17 +1.36%
American Express CAPS Rating: ****
F $16.06 Up +0.22 +1.39%
Ford CAPS Rating: ****
GM $33.93 Up +0.57 +1.71%
General Motors CAPS Rating: **
HON $93.13 Up +1.42 +1.55%
Honeywell Internat… CAPS Rating: ****
KODK $30.10 Up +0.82 +2.80%
Eastman Kodak Comp… CAPS Rating: *
SON $41.90 Up +0.25 +0.60%
Sonoco Products Co… CAPS Rating: *****
UIS $28.73 Up +0.80 +2.86%
Unisys Corp CAPS Rating: ***

Special Offer for Savvy Investors Like You!

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut semper dui vitae molestie venenatis. Suspendisse.

Enter Email Address:



Privacy / Legal Information
Advertisement