suspending a 401K contribution or stopping all together
Is it ever a good idea to suspend a 401K contribution? My employer has never contributed to it, and I have been employed there about 30yrs. I am single and recently purchased my own condo from inheritance money. I own my own car and have some savings too. My problem this year was I was ill and could not work for 3 months. I have insurance from work; however, deductible is $6000.00 right now and I am still paying on last year’s medical bills. Plus, the added expense of the condo and taxes too! Would it make any sense to suspend payment to 401K and use for my bills? The amount is about $200.00 a month. I live in Illinois where taxes are high as you know, and first installment is due soon. I am 60yrs old so quite a way from retirement. I would appreciate your advice.
Terry Says
I rarely suggest suspending retirement plan contributions, but in your case I will. The interest you are paying on the bills is likely twice as high as what you’d earn on your investments at this stage of life. Shame on your employer for never matching contributions. But it’s too late for that now.
My suggestion is to pay down those medical bills as fast as possible — even if it means taking on a part-time job as a cashier or server if you can now work. You don’t want to go into retirement eventually with this kind of debt hanging over your head. Hope you’re feeling better and can put this advice into action!
