Saving for retirement is an essential financial goal, but there are certain circumstances in life when it may be best to push pause on retirement contributions. By recognizing these situations, you can better allocate resources and make informed decisions. Below we discuss the times in life when slowing or pausing retirement savings goals could be the right call.
Debt and Financial Stability
If you are burdened with high-interest debt, such as credit card debt or student loans, it’s important to allocate more funds towards debt repayment before saving for retirement. Reducing debt obligations will improve your financial stability and free up resources for retirement savings in the future.
Job Loss or Career Transition
If you’ve lost your job, it’s a good idea to pause retirement contributions temporarily until your financial situation has improved and you are once again steady in the workforce. When you decide to restart retirement savings, be sure to take advantage of any 401(k) matches that your new employer may provide.
Likewise, when you are in a career transition, whether that be changing your career path or starting a new business venture, it might be necessary to redirect funds to supporting your career goals or acquiring new skills in your industry.
The above situations might call for a pause on retirement savings, but not a full stop. If you are in a position of needing to pause retirement savings, it’s essential to have a plan to resume saving once the transition is complete and you are back on your feet.
Major Life Events and Unforeseen Circumstances
Life happens, and sometimes we’re faced with a financial hardship. Unexpected medical expenses and major life events, such as having a child or making a cross-country move, can impact your finances. During these times you may need to adjust your retirement savings strategy to meet these needs. Pausing or slowing down retirement savings temporarily can provide flexibility while protecting some financial stability. Once you’re back on your feet, you can revisit your retirement savings strategy and make adjustments accordingly.
The above examples are all valid reasons to readjust your financial priorities and push pause on saving for retirement. By recognizing these situations and making informed decisions, you can maintain a financial balance and step up your retirement savings game once you’re in a less financially tumultuous phase of life.
