Yesterday I wrote about my impending layoff and my desire to plan and prepare so we can keep a nice little nest egg in the bank while I transition from full time employee to temporary stay-at-home mom. One thing I failed to mention was my desire to fully fund my 401(k). Given the fact that I have no idea how long I’ll be out of work, it certainly doesn’t make a lot of sense to put money away for retirement. After all, I’m pinching pennies all over the place to make certain we have accessible money to spare.
In fact, if you were in a similar predicament and asked me if you should continue to fund your 401(k) I would probably say ‘hell no.’ I would tell you to decrease your contribution to the minimum amount that your company would match or 0% if you didn’t have a solid emergency fund. The more time you think you’ll be out of work, the more money you should have on hand in your checking and savings accounts. If you find yourself in dire straits you certainly don’t want your money bound up in retirement accounts that you can’t access.
So why am I choosing to fund my 401(k)? Well it’s a completely emotional reason. I have been contributing the maximum amount permitted since 2004 and despite losing my job I don’t want to save less this year.
I graduated from college in 1999 and if I made more money I would’ve started saving the maximum amount that very first year. Of course, on my initial salary that was absolutely impossible! I barely made enough to pay for food and rent, but I pinched my budget just enough to set aside the minimum amount required to receive a full company match. Of course, as the years went on I began to earn more and more and therefore had more to set aside. In 2003 I was a few hundred dollars short of hitting the limit. In 2004 I hit the limit for the very first time!
I get a huge sense of accomplishment from watching my 401(k) build and grow. Despite facing a layoff I feel no differently about meeting my goal this year. If I were in dire need of the money I would certainly decrease my contribution to 0% or at least to the minimum amount the company will match, but I’m very close to reaching the yearly limit and don’t want to end the year without seeing a $16,500 contribution!
Is it a little crazy to put money away for something so far in advance when bigger things may loom in the immediate future. Of course it is. Will I change my mind and decide not to fund my 401(k), I don’t think so.