401K Match Slashed In Half

I did some analysis of my husband's 401K performance a couple of days ago, and made some estimates about where it will be a few years from now and by retirement. I played around with changing his contribution level, and even took a look at what we could expect if we maxed out the contribution limit. No idea where that money would come from, but hey, wouldn't it be nice? I had no sooner finished reading this article about retirement plans getting changed up on you (and not in a good way) when I returned home to find a letter from my husband's company saying as nonchalantly as possible that his 401K match of 4% was being dropped to 2%.

Poop.

I suppose my fantasies of him getting another raise at his annual review this month are a touch optimistic, too. Come to think of it, annual reviews haven't even been scheduled yet. Perhaps management is avoiding some awkward conversations.

It's definitely not all bad. I know a lot of companies lowered matches a long time ago, or have even cancelled them altogether. His company has been very generous, and they continue to offer a very good benefits package. On the other hand, he hasn't gotten more than 10 hours in since the holidays so things can't be looking that good. He works as a superintendent in the construction industry, so slow winters are pretty par for the course. I'm withholding my panic about unemployment and job searching for now. At the moment I just want to get through the slow period and decide if we should bump his contribution up 2% to cover the difference between this year and last year.

I had already been thinking about upping his contribution last year. Ultimately I didn't pull the trigger because we took a somewhat ridiculously expensive vacation to spend the holidays with my extended family overseas and I realized the "extra" money I think he could stand to save each month had pretty much been eaten up by that last year. I think we will use this change at the company to motivate us to increase the contribution this year, even if it's just by 2%. The great thing about the pretax status of 401K contributions is that we'll barely feel a 2% increase. And if the economy turns around and his company brings back their 4% match, we'll be sitting at a 10% total without his paycheck changing at all. Maybe one day we'll even be able to get close to that max!

Here's to a better 2011!