GRAND RAPIDS, Mich. — Businesses all over the country are struggling to make ends meet as we continue to respond to the COVID-19 crisis. Many are laying off employees, requiring furloughs or even closing their doors entirely. We have seen reports of some businesses in the U.S. cutting their contribution to their employees benefits as a way to cut costs.
In some cases, cost cutting measures may include the company's contribution to their employee's 401(k) retirement accounts. Ted Schmelzle, the Senior Director at Securian Financial, says it's not something to be concerned about right now. He expects for employers to bring those contributions right back up as things settle down again. The decision came when companies are really struggling, but it won't last in a competitive job market. In order to attract employees and keep them, businesses will need to implement those benefits again.
In the meantime, Schmelzle says the best thing you can do is be informed. Ask questions about how it may impact you now and in the future. Talk with a financial advisor or planner to determine your investment horizon, how diversified your portfolio is, and your personal goals when it comes to finances and retirement. For people who aren't looking to retire any time soon, there is a longer amount of time to invest in your retirement accounts, and make up for any short term losses you are currently seeing. For those looking to retire sooner, it's a more compressed timeline to make up those losses, but still possible.
Schmelzle also says that any short term volatility in the market that we've seen or will see aren't reason to be concerned for your retirement accounts. "We know that on average, and in general, investing over the long term is a very sound play. We know that there’s going to be volatility that happens year over year and it might even be for a period of time that makes you very uncomfortable," Schmelzle says. "It’s always best to step back, really take a cooler look at what your long term goals are, what your investment horizon is, and then try to step away from the noise, this short term volatility, and make sure you’re making the very best decision that you can with your head rather than your heart."
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