You know how crucial it is for your future success to continue saving for retirement but life tends to throw unexpected challenges at you that can make it difficult to adhere to this plan. If you are confronted with financial issues that affect your ability to save, you may want to consider temporarily pausing your contributions to your retirement accounts until you overcome these issues. While taking out a loan can seem like a viable option, the interest rates you will be responsible for can cost you considerably more than you would face by taking a short-term hit to your retirement savings.
For expert assistance when facing this situation, consult the financial advisors at The Hopman Group. Vice President Melissa Blumenthal has over 25 years of experience educating her clients. She can help you prepare for an enjoyable retirement in the future. She advises that you carefully consider the long-term impact of your current situation on your savings. Melissa can assess each of your investment accounts and evaluate how they are performing. She can determine if they align with your goals for the future. This will allow you to figure out how far a temporary pause will set you back. Another option may be a complete transformation of your savings plan to best suit your situation.
Melissa cautions, “Don’t be afraid to just pause temporarily to handle the crisis situation.” If pausing your contributions could provide a much-needed solution to avoid accumulating debt and put you back on track to your retirement goals, you should seriously consider doing so.
When You Should Stop Saving for Retirement
Pausing contributions to your retirement accounts can be an incredibly valuable solution in the following situations:
- Experiencing a health crisis that involves expensive bills not covered by your insurance policy.
- Carrying significant credit card debt that you are unable to pay off with regular monthly payments.
- You or your spouse has become unemployed. Therefore the income of the other cannot reasonably cover your combined living expenses while you search for a new job.
- Establishing a new business venture and require funds to purchase necessary components, such as supplies, equipment, or real estate.
- Planning to purchase a home, you need sufficient savings to close on your home and provide a suitable down payment.
- Carrying significant student loan debt and you would like to pay off your balance as quickly as possible to divert that funding elsewhere.
Remember to Set Up An Emergency Fund
Aside from the financial issues described above, you may also want to pause your retirement savings to create an emergency fund for your family’s unexpected expenses. Melissa Blumenthal suggests that you should aim to create an emergency fund that covers two months’ worth of your living expenses to prepare for financial crises that may arise in the future. After you can successfully save this amount, you can modify your goals and work toward saving for six months of expenses, then one year. After pausing your retirement savings for a full year, if you are still unable to return to your normal contributions, you should consult a professional financial advisor to reevaluate your circumstances and adjust your plan accordingly.
Contact Us to Learn More About Retirement Planning
If you are concerned about when to stop saving for retirement, contact The Hopman Group today. Our expert team of knowledgeable financial advisors will work with you to assess your financial situation. We can determine the obstacles that are holding you back from making progress in your retirement savings. One of our advisors can offer a variety of retirement strategies. We will help you develop a personalized, comprehensive plan to reach your goals. We will also closely monitor your plan to make any adjustments you may need as time passes.
With financial planning from The Hopman Group, you can confidently save for retirement without draining your savings in the meantime.