Thursday, February 11, 2010

The Hidden Reality in the Company Match

You were among the fortunate ones.  You kept your job.  You were also among the unfortunate ones.  You lost money in your retirement just at the time when your company was trying to stop bleeding cash.  They stopped matching your contribution and you, wondering if they knew something you didn't, stopped investing exactly at the time when you should have actually upped your exposure to a nosediving stock market.  No one ever got rich investing at the top.

But you were scared.  You saw your 401(k) balance nosedive and your future evaporate (or at least it seemed it was) right before your very eyes.  Hindsight tells you that you shouldn't have done a thing; simply waited.

And now, the stock market is moving in the right direction - albeit sproradically and in fits and jerks.  And behold, companies are talking about bring back the matching contribution.

When the 401(k) match returns, and it will, you might find it to be a different beast than the one that was canceled in the previous years. The 401(k) match, a perk or incentive to get you to invest in your retirement in the absence of a pension, disappeared as companies cut back on hiring, increased layoffs and looked for numerous ways to cut costs.

They knew -and in many cases still do – that those that have a job were likely to stay put. Even without the incentive that the matching contribution was, jobs weren’t readily available. In other words, folks stayed put because they had to, not because company B down the road was offering better benefits than company A.

Are we being too optimistic about the 401(k) match?

Paul Petillo is the managing editor of

1 comment:

Life Insurance BC said...

Thank you for all the great posts from last year! I look forward to reading your blog, because they are always full of information that I can put to use. Thank you again, and God bless you in 2010.