Protect Your Retirement Savings Without Your Employer's Help

First, we killed your pension plan; now, we're taking away your 401(k) matching contributions.

That is, in essence, what corporate America is telling workers as dozens of employers rush to halt their contributions to employee retirement savings accounts as a way to weather the current economic storm.

Since June, more than 60 employers have announced they would reduce or halt entirely contributions to employee retirement plans, according to the Pension Rights Center. These employers include Motorola, UPS, FedEx, the Atlanta Convention and Visitors Bureau and A.H. Belo Corp., a newspaper company that once employed me.

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By doing so, these employers are reneging on their end of an implied deal by corporate America that made it easier for companies to escape from the burdens of traditional pension plans with the enactment of the Pension Protection Act of 2006.

That's why I say don't believe a thing your employer tells you about helping you save for retirement. Always assume you are on your own when it comes to accumulating a nest egg that will carry you through your later years.

Given that reality, let me suggest seven steps you might take if your employer is among those that have halted contributions to your 401(k) or other retirement savings plans.

1. Don't stop saving: The absolute worst response to a halt in retirement plan contributions by your employer would be to stop your contributions. Even though the incentive of an employer match has been removed, you still benefit by contributing to a 401(k) plan or other retirement savings plan.

The first benefit, of course, is the accumulation of funds to help you reach a day you will no longer need to work. But if you are young and have trouble thinking that far down the road, remember there is an immediate tax benefit to retirement plan contributions. For every dollar you direct to a 401(k) account, you can easily save 20 cents or more in state and federal taxes.

How to Save for Retirement

2. Save more: There's no getting around it. If your employer stops its contributions, you will need to contribute more to make up the difference. If your employer kicked in 3 percent of your salary, you should try to save 3 percent more. If you can't do it all at once, try bumping up your contribution gradually -- maybe by 1 percentage point of your salary once or twice a year.

The truth is you already should have been setting aside more than your employer unless your employer is unusually generous. Given the disappearance of traditional pension plans, the minimum combined employer-employee contribution to a retirement savings account should be at least 10 percent of salary.

If your employer is kicking in 2 percent, you can get away with an 8 percent contribution. But if your employer contributes nothing, then you need to count on setting aside at least 10 percent yourself. And if you are in your 50s or 60s and behind in saving for retirement, that figure should be higher.

The eventual goal for every worker should be to contribute the maximum amount allowed by law. For 401(k), 403(b) and 457 accounts, the maximum contribution is now $16,500 with an extra $5,500 allowed for those 50 and over.

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