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Experts: Is It Ever OK To Cut Back on Saving for Retirement?

valentinrussanov / Getty Images
valentinrussanov / Getty Images

When it comes to good financial habits, the general rule is everyone should be able to put a certain percentage of their earnings into a retirement fund and continuously keep contributing to said fund. But life is full of unpredictable moments, and expenses, which can lead to people cutting back on saving for retirement.

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When, if ever, is it OK to cut back on retirement savings? Let’s look at the circumstances that may reflect an understandable need to step away from emphasizing saving for retirement and prioritizing other financial matters.

The Loss of Your Job or Your Partner’s Job

If you, or your partner, experience a job loss it’s perfectly OK to cut back on saving for retirement. The loss of a job can mean you’re down to one (or no) income in the household and may struggle to make ends meet.


For those experiencing a job loss, Andrew Rosen, CFP and president of Diversified LLC, recommends assessing the situation. Determine if your money is better spent on necessities right now and understand it’s alright if you need to put more money into your retirement later on down the line. In some situations, you may even decide to retire later. Those with some wiggle room can try to at least get any 401(k) match offered by their employer.

“In an ideal world, you want to prioritize your retirement, so you can take advantage of compound interest,” Rosen said. “However, there are times when the world can be a difficult place to survive and you need to prioritize living in the here and now.”

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Saving For Short- To Mid-Term Goals

Those saving for a down payment on a house or a college education for their children may decide to cut back on saving for retirement to reach these short- to mid-term financial goals.

There is one very important step to take prior to saving for retirement or even for these short-term goals and that’s creating an emergency fund. You should have three to six months of living expenses in an emergency fund, said Ryan Klekar, CFP and senior wealth advisor at Truepoint Wealth Counsel.

If You Carry More Than 6% in Debt

Several financial professionals GOBankingRates spoke to said there are circumstances in which being in a certain amount of debt can lead to scaling back on retirement savings.

There is a specific debt percentage that would lead to curbing retirement contributions to pay off your debt. Those with 6% or more in outstanding debt can cut back on retirement and prioritize paying this debt off, said Brendan Sheehan, CFP and managing director at Waymark Wealth Management.

“There is no guarantee that an investment in a retirement account will earn 6% after taxes, but there is a guarantee you will pay 6%+ in interest while you carry a balance,” Sheehan said.

When Should I Speak To a Financial Advisor?

Are you still uncertain about whether your financial situation qualifies for a pause in retirement savings? Set aside some time to meet with a financial advisor or financial planner. These qualified, and trusted, individuals can help you devise a plan to get back on track with your retirement savings in the event of a pause. This ensures you don’t risk stopping saving for the future and never restarting again.

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This article originally appeared on Experts: Is It Ever OK To Cut Back on Saving for Retirement?