2 Compelling Reasons Why You Shouldn't Cut 401(k) Retirement Contributions to Manage Inflation
According to a recent survey from insurer Nationwide, 22% of 401(k) savers have cut or are considering cutting 401(k) contributions to deal with inflation. The stat isn't surprising. After all, trimming retirement contributions is an easy, immediate way to add cash to your budget.
The thing is, there are major drawbacks to reducing your retirement contributions -- drawbacks you should consider before you implement this strategy. Explained below are two compelling reasons why you shouldn't cut 401(k) contributions in these inflationary times.
Over the long run, the average annual growth rate of the stock market has been about 10%. That's three times higher than the long-term inflation average of 3.24%. It may not feel like it but ongoing investing in your 401(k) protects the purchasing power of your retirement wealth, long term.
Source Fool.com
