GASP…I Decreased My 401K Contribution

So before you jump on me about decreasing my 401K contribution read ahead! I initially started contributing 10% of my paycheck to my 401K; I received a full 7% match. Around September or October when my husband started working full time, I decided to increase my 401K contribution to 15%, making the a total contribution of 22%. Pretty great, right?

I got extremely caught up in everybody’s advice of maxing your 401K and contributing to your retirement, and how we won’t have enough money to retire if we don’t max out our contributions or how maybe we want to retire early in the future and we should invest as much as possible right now. And realized I might be living too much in the future by contributing so much… The realization came when my husband and I casually talked about our future plans and investments. I say casually, but it was intense. Deciding where the money goes is still a hot challenge for us as we navigate the choppy waters of personal finance.

He mentioned even though it’s great we are saving for retirement, he, also, wants us to save for a house and a small business fund. We won’t get to touch the money we put in our retirement accounts until 40 years from now.

I’m not quoting his exact words, but you get the jest. I may not always tell him, but I’m glad I have a partner who balances my crazy aggressive strategies.

I, also, read Ninja’s recent retirement post and their decision to invest about 15% of their income towards retirement. It kinda made me feel not so alone, you know?

I just put in $3,000 to our ROTH IRA A. Although right now it’s less than $3,000. This does not mean we are never going to increase our 401K contributions. Any raises will go to the 401k. Also, if our income goes up, I will have to re look at how much we are contributing to my 401k to avoid getting heavily taxed.

What will we do with the extra $100-$200? We will put it into our short term savings. There’s so much we want to do: travel, house, live, help family, fund a business. Sometimes it’s best to follow the tune of your own drum, not other’s.

Until the end of 2012, my 401K contribution will remain at 10% + 7% company match = 17%.

How do you prioritize your retirement? 

12 responses to “GASP…I Decreased My 401K Contribution

  1. Wow, a 7% match that is AWESOME! I think you’re doing good, anything over 10-15% is a good number to shoot for.

  2. Mine is pretty simple right now because I haven’t contributed anything in the last four years. OK maybe around 3K, but it’s been difficult (notice I didn’t say impossible) to put money towards retirement on my crappy freelance pay. working on it…working on it…

  3. You should have a comprehensive plan, not just a retirement plan. It is great that you are thinking of your future, but, your husband is right. What about the other important things in your financial lives? Can’t forget about them.

    • Yup, which is why I am realigning our strategies. When I first started in June, we didn’t know what we wanted. Did we want a house? Did we want to move to a new place?
      I mean we still don’t know. Both of us are growing in our careers. But I realized we needed to have more money for the short term (ie the next five to ten years) as opposed to worrying about what’s going to happen in four decades.

  4. I’ve been considering decreasing my contribution because I want to focus on early retirement rather than a traditional retirement. I’m currently contributing 15%, and if my company’s 401k match improves in 2013 (it better!), I might reduce that a little to let me save for other goals.

    • If you are focusing on early retirement, wouldn’t you want to save more for retirement?
      It’s great you are contributing 15%!. Is that before company match?
      Yea, like I said in my post I was contributing 15%, but decided taking it down a notch to save up for other short term goals.

  5. Not enough, really. I’m contributing 4 percent. Right now our priorities like you are travel and a house. I can’t manage all those AND contribute more on what I earn.

  6. Your thought process totally makes sense to me – you’re maxing out your match, but didn’t want to risk not having enough cash on hand for a downpayment for a house, etc. You don’t want to throw the baby out with the bathwater by piling your 401K high but then coming short on the 20% downpayment and ending up having to pay PMI or something. Well done!

  7. I believe 17% is a very respectable amount and you’re doing what’s needed to get the 7% company match which is free money! Life is about trying to balance present and future needs; this is no different with money.

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