Struggling workers hold off on cutting 401(k) savings so far

One couple, trying to balance upcoming education costs with rising gas and food prices, recently discussed that idea, hoping they could take home a bit more in each paycheck. The Dublin, Ohio, investment adviser crunched some numbers and suggested it made more sense to reduce their Roth IRA contributions, which helped save the tax deductions associated with the 401(k).

Retirement plan administrators say they are not seeing a large-scale move by employees to reduce their contributions to 401(k) plans. But investment advisers say more people may consider cutting back on retirement savings if the economic doldrums continue.

"I think it's a conflict that they're constantly in battle with," said Menges, an adviser with Investment Partners LPD. "But right now, the broader question is, which one are they going to sacrifice in favor of the other?"

Eric Levy, a partner at Mercer LLC, which manages plans for about 1.5 million people, examined contribution statistics from July through March 31, and found no evidence of widespread cutbacks. But he said investors are nervous.

"I think it's a very important and legitimate concern, because people's paychecks are only so big," Levy said. "They're not getting significant (pay) increases, so I'm sure people look at what they can control."

Representatives from Fidelity Inc., the largest retirement plan administrator in the U.S., and The Vanguard Group also said they have seen no sign of contribution reductions.

Kevin Crain, a managing director at Merrill Lynch & Co., said, "If we look at the first quarter of this year, as opposed to the first quarter of last year, participant contribution is actually up slightly." But he credited the increase to automatic enrollment, in which employers don't wait for workers to sign up to participate, and sometimes even schedule automatic contribution hikes.

Merrill Lynch manages 401(k) plans for more than 40,000 companies, and a total of about 6.9 million individuals nationwide.

Pam Hess, director of retirement research for Hewitt Associates, which manages plans for about 400 companies and 2.9 million individuals, said some investors might start paring their contributions when they get their plan statements showing further losses due to the stock market's volatility.