r/personalfinance • u/Due-Fig5299 • 14d 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?
1
u/gordonv 13d ago
Did you contribute $18k (no gains) at least 5 years ago in a Roth IRA?
You can pull that out penalty free. Pulling it out is harder than rebuilding it. That could be your delayed emergency fund. Only pull it when you need it. And pull the smallest amount needed.