Cutting 401(k) Contributions A Risky Strategy

Rising gas and food prices and a stock market slump are starting to prompt people to reduce or suspend contributions to their 401(k) retirement plans. Charles Schwab, for instance, said that more than 7 percent of participants in the 401(k) plans it administers reduced or stopped their contributions in the first quarter of this year, up from 5.8 percent the year before. Putnam Investments' survey of plan advisers in May found that one out of five participants had reduced 401(k) contributions this year. And more than 9 percent of workers newly eligible to enroll have decided to postpone participation. "People really do have the message that retirement is important and they need to save," says Anne Coveney, a managing director with Putnam. But "there is so much pressure on them right now, some workers are starting to turn to... [read full story]