When 401(k) Matches Disappear, Your Mortgage Payment Strategy Doesn’t Have To

If it feels like corners are being cut all over, yet your bills just keep going up and up—you’re not alone. 

One of the latest hits to homeowner finances is the cutting of 401(k) matches. While not yet a widespread trend, it’s becoming a real concern as several heavy hitters have made the move.

Case in point: TTEC paused 401(k) matches for its U.S.-based employees, as reported earlier this year. Chief People Officer Laura Butler noted in an employee memo that the pause would last nine months, with the company hoping to resume its 3% match if business performance supports it.

For homeowners planning to stay put in retirement, that lost match isn't just pocket change—it’s money they were banking on to help cover their housing costs in old age.

“Losing a 401(k) match isn't just losing a perk that came with the job. It's losing part of the retirement savings engine,” says Evan Mills, a financial advising analyst with Scholar Financial Advising LLC. 

“It's one of the only places you can receive an immediate return on the dollars you're contributing, so it's a major factor for a lot of people's retirement savings and a cause for concern. It's an added benefit a lot of people look for in jobs, and without it, it does make it a little more difficult, but not impossible, to save the proper amount for retirement."

So, what should you do if this scenario lands on your doorstep?

Working out the math

First, calculate the actual size of the hit.

Let’s assume you’re a 61-year-old homeowner who makes $100,000 a year. 

When you were 40—the current median age for a first-time homebuyer—you bought a $750,000 home with a 30-year-mortgage at a 6.5% rate. You made the 20% down payment, so you’re off the hook for private mortgage insurance, which leaves you with a principal and interest payment of $3,792 a month. 

(To keep things simple, we’ll set aside property taxes, home insurance, and maintenance for now.)

At 61, you have nine years left on that mortgage, and you plan to retire at 67. If your company pauses its 3% match for nine months, you miss out on $2,250 in free pre-tax money ($3,000 if the pause stretches to a full year)—and that’s before factoring in lost compound growth over your remaining working years.

Admittedly, that might not seem like a lot, given that the money lost doesn’t even cover one month's mortgage payment. But remember, this is money you’ll need even more when you’re no longer working.

And every penny counts. 

"The more important factor is that the risk usually isn't that one mismatched year will drastically change your retirement or spending plan,” explains Mills. 

“It's that years of lower contributions, higher housing costs, and no plan to replace those lost contributions will truly affect your plan.”

What to do if you lose your match

Losing an employer match doesn't mean your retirement plan has to fall apart, but it does mean you need to pivot if you're counting on those dollars to help pay an existing mortgage. 

Ideally, Mills recommends bumping up your own contributions to make up the difference.

“If you can keep your savings rate closer to the original target, you'll save the same amount you've been planning for. That means, if cash flow allows, the 3% match you got from your employer previously could become 3% of increased savings you now contribute yourself. That's not an easy thing to do, but if cash flow allows, it's a way to combat the lost match.”

But it’s not the only avenue you can explore. 

“A cut match should really mean you revisit your overall plan and see where cash flow is better used to overcome it,” says Mills.

He recommends being more intentional about your cash flow, like paying off high-interest debt or saving to a Health Savings Account if you're eligible.

“Student loan matching is beneficial for individuals coming out of college who are putting their cash flow toward loans instead of a 401(k),” adds Mills, “because, if their employer offers the provision, they may still receive a retirement-plan match based on qualifying student loan payments.”