When to stop saving for retirement
Wednesday, May 5, 2021
We talk a lot about the various ways Americans should be saving for retirement ó and with good reason. After all, a comfortable and enjoyable retirement is the way you reward yourself for a life of hard work and financial discipline. But hereís a retirement savings question that may not get asked very often: Are there times when you should stop saving for retirement, even if only temporarily? There could be several reasons, including: starting a new business, buying a new home or paying off student loans. Letís examine a few others that come to mind.
Medical expenses not covered by your insurance company have to paid out of your own pocket. And I think we can all agree that health care isnít cheap. One simple way that may work is to pause your 401(k) contributions and instead put that money into a savings account so you can access it to cover medical bills. Obviously, the best solution is to have an emergency fund already established to cover these expenses.
If saddled with credit card debt large enough that you canít pay it off each month, it may be wise to take a break from saving for retirement so you can pay off your credit cards. The interest youíre paying on your credit cards may wipe out the gains youíre enjoying in your retirement strategy. The key here: Donít use them again once they are paid off!
Let me take a moment to emphasize the word temporary. That means once youíre caught up you should immediately restart your 401(k) contributions. Itís easy for one month to turn into a few months to turn into a year. And that could lead to serious repercussions in your retirement strategy down the line.
Advisory services are offered through Innovative Financial Planners, LLC, an Investment Advisor in the state of Missouri. Insurance products and services are offered through Innovative Insurance Consultants, LLC, an affiliated company.
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