Sixty-four percent of the calls going to Financial Finesse, which provides financial counseling to employees, are about debt reduction and budgeting, whereas only 15% of the calls are about investing and retirement planning.

“In their concerns about reducing debts and cutting expenses, employees are ignoring retirement planning,” according to a report by Financial Finesse. “The credit crisis was the first financial crisis to hit us. The retirement crisis will be the next. We believe it will be both more significant and more prolonged than the current economic crisis.”

 With 11% of companies either reducing or eliminating their 401(k) matches, balances down 20% or more, employees either reducing or halting their contributions, and hardship withdrawals on the rise—Americans are heading for a paltry retirement.

Reducing debt is obviously very important, but people may be overreacting to the financial crisis and ignoring their inevitable needs in retirement, said Liz Davidson, chief financial officer of Financial Finesse.

“People are behind because of the downturn, and they might be compounding the problem by investing too conservatively or taking money from their retirement plans in the form of a hardship withdrawal or a loan,” Davidson said. “It’s kind of a one-two punch. The first punch came from the market and the economy. The second, people are effectively doing to themselves.”

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