Should I put my 401(k) contributions on the back burner for now?

by David Topper

Right now there are many that have lost their jobs and a large portion of their investment savings due to Covid-19 related market conditions. This may cause many to reconsider their contributions to retirement and instead save that money or use it for other things.

I have always been avid proponent of continuing your contributions no matter what. But are there some cases where it may be valid to pause those contributions?

One case for a pause is dependent on your emergency fund. I usually recommend you have at least 3-6 months’ worth of basic expenses saved in that fund. If you do not have an emergency fund or if you are tapping into that fund to help pay for housing, food, or other necessities, then you might consider pausing Retirement contributions.

The main reason people pause retirement account contributions is not their decision at all. Those who have lost their jobs, and there are a lot of you out there, your contributions have stopped whether you like it or not. If you feel that your job is safe and if your emergency fund is in place then please continue to contribute. In fact if at all possible increase your contributions. In the long term you will be glad you did. As always, I recommend talking to a retirement income planner to give you advice that is best suited for your specific situation.