The growing trend for companies to suspend or even eliminate 401(k) matches in this recession will inevitably translate into fewer people contributing to their retirement savings, writes Rockefeller Foundation Associate Vice President Janice M. Nittoli in an editorial in The Wall Street Journal titled, “Now Is No Time to Skimp on Retirement Plans.”

Millions of people will consequently face difficult retirements, she says, since one-third of U.S. employers have cut back on 401(k) matches since January 2008 and another one-third plan to do so before the end of the year.

As Nittoli puts it, “The problem with this is twofold. First, retirement payments that are skipped in tough years can never really be made up in fatter years. Second, most Americans already fail to put enough away to avoid the risk of falling into poverty in their older years.”

For 401(k) plans to properly work, even just as a supplement to pensions, which his how they were initially designed, “contributions need to be both sufficient and consistent,” she says. At the end of 2007, the average 401(k) plan had a meager $18,942 in it.

One way to counter this, Nattoli said, is the Rockefeller Foundation is looking at how annuities and further tax incentives might safeguard Americans’ safe and healthy lives in retirement.

For the time being, if employers continue to cut back or eliminate 401(k) matches, she concludes, “Such a new norm would only trade today’s individual sorrows for tomorrow’s societal calamity.”

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