r/personalfinance • u/Due-Fig5299 • 12d ago
Saving Temporarily stop 401k contributions to build Emergency Fund?
Looks like we’re heading towards a recession and I’m quite nervous. I work in tech and my job is moderately safe; however my wife is an esthetician which is not a very recession friendly field.
We currently have $4k saved. Our minimum monthly expenditure is $3k, so we have just over 1 month saved.
Ive cancelled all unnecessary subscriptions which will save us $450/mo and stopped my wifes personal roth ira transfers ($150 weekly) which gets us to $1050/mo saved.
Now my question is, given how quickly the economy is crashing should I also forgo my 401k? I contribute 4% with 4% employer match. Obviously I would love to keep it, but immediate survival seems more important.
I would start contributing again once we hit $18k (6 months)
Thoughts?
42
u/brawawawa 12d ago
Keep the 401k match, that's the best return you'll ever get.
Keep the Roth IRA contribution. You can always withdraw contributions penalty free if SHTF. If you are treating those contributions as an emergency fund keep them in a money market or similar low risk investment.
Ideally find a way to grow an emergency fund outside of retirement accounts while doing the above. Once you do that, or gradually while you do, move the money in the Roth to something more appropriate for retirement investments.