Don't know if others are following the AOL story this week re: AOL changing its employee 401k match from bimonthly contributions to a lump sum contribution on December 31. Coincidentally, our family friend was recently hired by AOL (he is here on a H1b visa and is close to gaining citizenship) and last weekend he mentioned he wanted help figuing out what funds to invest in in his 401k. He is in his late 30s and has no retirement savings. Instead he has been making extra principle payments on his house, as in his native country (much recent political volatility in is homeland) real estate is the sole means of investing for retirement.
Anyhow, I told him to still put money in the 401k at least up to the (lump sum) match.
But I was thinking about AOL's decision to change this employee benefit. Effectively it means that employees are tied to the company to get the annual match. Also, they lose the benefit of dollar-cost-averaging. Sometimes the biggest market gains happen over a few days in a given year. If your match money isn't there - you lose out.
I hope AOL's decision doesn't spread across corporate america. Most of us have lost out on pensions, and the 401k is our primary retirement vehicle.
Anyhow, I told him to still put money in the 401k at least up to the (lump sum) match.
But I was thinking about AOL's decision to change this employee benefit. Effectively it means that employees are tied to the company to get the annual match. Also, they lose the benefit of dollar-cost-averaging. Sometimes the biggest market gains happen over a few days in a given year. If your match money isn't there - you lose out.
I hope AOL's decision doesn't spread across corporate america. Most of us have lost out on pensions, and the 401k is our primary retirement vehicle.