With the pandemic raging on, many companies have been forced to make difficult, cost-saving decisions—and unfortunately, workers have been the most impacted. According to a new MagnifyMoney report, employees could lose $13 billion in retirement plan contributions over the next twelve months as companies suspend matching programs.
Whether you’re early in your career or nearing retirement, losing a year of 401(k) matches could be a major blow to your savings. We spoke to experts about the best ways you can try to minimize the damage.
Try to contribute more to your 401(k)
If you haven’t experienced a pay cut—and there is some wiggle room in your budget—you may consider increasing your retirement plan contributions. Before making these changes, though, Mark Reyes, a certified financial planner and financial advice expert at Albert, suggests topping off your emergency fund to at least three months of living expenses.
After that, you can review your budget to see if you can afford to save more for retirement. “Generally speaking, you want to contribute 10-15% of your income towards your retirement account. If you can afford to contribute more, even better,” says Reyes.
Consider picking up a side hustle
Over the past several years, side hustles have become increasingly popular. In fact, one-third of folks started working a side gig to pad their retirement savings, according to a 2018 Betterment report.
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“A major benefit is the opportunity it provides to diversify your income. Every dollar adds up along the way,” says Andrew Westlin, a senior financial planner at Betterment. Earning some extra cash may allow you to boost your 401(k) contribution, which could narrow the savings gap.
Take advantage of your employee benefits
If you aren’t making the most of your company’s benefits package, you may be missing out on some easy ways to save extra money. For example, you may have a flexible spending account or a health savings account, which you could use to save money on medical or dependent care expenses. “Money saved on other benefits can be put towards your retirement contributions,” says Reyes.
