WSJ guest writer says don’t participate in 401(k)s: What’s your rebuttal?

In a recent guest blog for the Wall Street Journal’s Market Watch, Cliff Goldstein, a member of the personal finance team at consumer tips site NerdWallet, offered up “5 reasons not to contribute to your 401(k).” Within the first few sentences, he writes that “a 401(k) isn’t for everyone [and] in certain situations, dumping money into a 401(k) is imprudent.”

I’ll admit, I initially wrote off Goldstein—despite the fact that he’s got an econ degree from Georgetown and cut his financial advisory teeth at Goldman Sachs. Pfft! What does that guy know? How is there possibly one good reason to not save in a 401(k), let alone five?

I kept reading though, and it turns out Goldstein makes five valid, measured points—ones that your employees no doubt have raised as reasons they can’t participate in your company’s plan. In short, he advises employees against saving in a 401(k) if they:

1. Lack adequate emergency savings first.
2. Don’t receive a company match.
3. Have high amounts of debt.
4. Fear future tax increases.
5. Want a more flexible savings vehicle with lower fees. 

Like it or not, Goldstein makes sense. People who are living paycheck to paycheck (as many employees are), up to their eyeballs in student loans and/or credit card debt and have no idea what they’d do should an unforeseen emergency occur are not thinking about retirement—no matter how much they should.

These same folks have even less urgency to contribute to a plan if you’re not contributing along with them. For more highly compensated individuals, no company match—combined with the tax fears, lack of flexibility and high fees that Goldstein notes—makes health savings accounts far more attractive.

I don’t bring this up to point the finger of blame at you or your company’s retirement plan design. Rather, I think it’s important that you consider Goldstein’s points and craft a solid rebuttal to them as you create a retirement plan communications strategy and how all of your benefits programs—not just your retirement plan—support employees in achieving financial security.

Then if, as you’re crafting that strong rebuttal, you decide to make some plan design changes to increase the use and perceived value of your 401(k), all the better! But let solid, clear, comprehensive communication be your cornerstone.