401(k) plans force difficult choices

The declining stock market isn’t the only thing eroding workers’ retirement savings.

Increasingly, big companies are suspending contributions to their workers’ 401(k) plans – 90 had done so as of last week, according to a count kept by the Pension Rights Center. Nearly half of those companies – including Hewlett-Packard, E.W. Scripps Co., 7-Eleven and Harrah’s Entertainment – did so in just the month of February, and some fear that it will only continue as the recession drags on.

That leaves employees wondering what they should do: stick with the 401(k) or take another course.

When companies are offering a 401(k) match, it makes sense to get as much of that match as you can afford. But without that, financial planners differ about what to do.

Some say moving into a Roth IRA is a smart choice. Unlike the 401(k), Roth contributions are taxed – but when you remove the money in retirement you’ll owe no taxes. So, especially for people who expect to be in a higher income bracket after retirement, the taxes paid now should be lower than those owed when the money is withdrawn, according to Kiplinger.com.

But contribution limits to a Roth are much lower than those for the 401(k) – and the payroll deduction method of savings is a huge advantage, especially for the savings-averse.

The fact is, if your employer cuts its match, neither plan will automatically replace the lost savings, financial planner Stuart Ritter told the Baltimore Sun. You’ll have to do that yourself.

“At the end of the day, you should do both” the Roth and 401(k), Ritter said.

Beans redux

Few foods are drawing the level of attention in these frugal times as beans. They’re topping everyone’s list of foods that offer the most bang for the buck.

Tara Gidus, a spokeswoman for the American Dietetic Association, put beans at the top of her suggestions for foods that allow you to eat healthfully on a budget. Gidus told the Orlando Sentinel that oatmeal comes in a close second – costing about 11 cents a bowl.

Also on her list of good foods for less: fruit that’s in season, frozen spinach, peanut butter, eggs and brown rice.

“The biggest food cost is food waste,” Gidus said. “Only buy what you will eat, and things that you will eat – people have the intention of eating things, like carrots, and they rot in the drawer.”