401(k) has advantages even if employer cuts match

That's troubling, because workers in that age group don't have much time to recoup their losses before retirement, McClain says. Stellar investment returns would help, but in this economy, tying your destiny to the stock market is a questionable strategy.

In addition, you need to invest aggressively to get above-average returns, and most older workers can't afford to take big risks, McClain says.

Absent investment returns, the only way to recoup losses is to step up contributions. Workers 55-plus who are saving 8.8% of pay would need to save more than 25% a year to recoup their losses in two years, or 15% a year to recoup their losses in five years, according to Mercer.

The loss of a company match makes the task of rebuilding retirement savings even more difficult, which is why many older workers will need to work longer.

"Whether consciously or subconsciously," McClain says, "that's the option most people are facing."

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: sblock@usatoday.com. Follow on Twitter: www.twitter.com/sandyblock

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