From the Mercury News.com: “401(k) change may create new lost generation.” Excerpt:
. . . Sears, which recently announced the suspension of its match, contributed $91 million to its employees’ 401(k) funds in 2007 on a profit of $825 million. With 2009 expected to be one of the most challenging years for retailers, the company will cease the match Jan. 31, even though it will finish 2008 with a profit that is forecast to be around $300 million at best. My read between these numbers is the match could threaten Sears’ profit in 2009.Multiply what is happening at Sears a thousand times over. Quickly you can see that billions of dollars will be absent from not just 401(k) accounts but the financial markets as well. That takes away capital from equity markets, which is supposed to fuel our future corporate growth.
At some point, companies such as Sears will reintroduce the matching funds. But the longer it takes, the more confidence will erode from this retirement savings model, and more people will develop empty gaps in their retirement savings time line.
Without companies leading the push for workers to save, the 401(k) model is in trouble. . .