Joel Dickson, a tax specialist with the Vanguard Group, says workers shouldn't give up on the 401(k), even without a match. You still get a tax break upfront and your money grows tax-deferred, he says. And, he notes, the loss of an employer match might be only temporary.
"One risk of stopping contributions is that you don't start them up again," Dickson says.
Also, with a 401(k), the employer selects several investment choices for you, which can be helpful if you're overwhelmed by the thousands of potential investment options out there. With a Roth, investment options are wide open, a perk for hands-on investors.
Bottom line: If your employer reduces or suspends its match, you have to save even more for your retirement to make up for the loss.
Younger workers with limited funds and who expect to be in a higher tax bracket in retirement should first consider a Roth. You can set up automatic withdrawals from your bank account to a Roth to make investing easy, Ritter says.
But for many of us, the 401(k) will still be the first choice because of the larger contribution limits and the sheer ease.
The worst move, though, would be to stop saving because of the weak stock market or the suspension of a 401(k) match.
"If you save nothing, you have nothing," Ritter warns.
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