Question about 401K contributions

I had an interview recently for a job in Virginia.  Chad and I have talked about moving back to the East Coast to be closer to our families, so I’ve been looking for jobs there as well as here in California.

If I get offered a job in Virginia, Chad would probably quit his job and come with me.  Since we’re in one of the worst job markets in recent history, I’m wondering if this is a smart move.  I have no doubt he could find a new job eventually; he’s smarter than I am, and has relevant experience.  He has more in savings than I do, so monetarily we’d probably be fine.

Still, there’s a part of me that’s worried.

I was thinking of pulling back on my 401K contributions, (to 8%, enough to get the full match) and socking away more cash.  I’m not sure why I feel compelled to do so; after all, the move is purely hypothetical at this point.  I also have a job interview in my current city next week.  We could stay, and I could wind up kicking myself for wasting the chance to invest.  Of course if we do move, I could wind up kicking myself for not having enough cash to tide us over.

What do you think?  Should I scale back until it’s not necessary, or keep up contributions until I know for sure we’re going to have a cash flow problem?  What would you do?

8 Responses

  1. How much cash will you guys have post wedding/honeymoon? It seems like the answer is “plenty”. If offered a new job, would you be able to both survive on one salary for an indefinite period of time w/out even dipping into savings? I think the answer is “yes”. Do you have any other major purchases (besides wedding) that might be needed (ie, car)? I think the answer is “no”.

    If my assumptions are correct, I really see no good reason to cut back the contributions. Perhaps you could consider cutting ROTH IRA contributions first. You can always make those up later in the year, but you can’t “make up” the 401k contributions if you end up changing your mind.

  2. I should add that I cut mine back to 8%, but I’m operating under some different assumptions and I feel the need to have as much cash as possible for the rest of the year.

  3. I’m sure some pfbloggers would yell at me for this, I don’t max out my retirement even though I could. Instead I save a lot of cash and I have investments in taxable accounts. I want to save for retirement without jeopardizing my current monetary safety. If saving up some cash makes you feel happier and more secure, do it. But I’m unconventional 🙂

  4. If I recall, you and Chad had quite a bit of cash reserves. So I would continue contributing to your 401k as you are since theoretically, you want to dollar cost average as much as you can while the market is down. But since finance is often times emotional, I would do what makes you feel the most comfortable.

  5. I think if you already have good cash reserves, you should just continue to throw your funds into your retirement. You will want that compound interest. Plus all the cheap stocks.

    On the other hand, only you know exactly where your comfort level lies. So I guess you should ask yourself: What’s the worst that could happen? If he didn’t get a job right away (3 months, 6 months, 9 months) what position would you be in, financially? That might give you a better idea of how secure you feel, once you can say, “Well, so long as you can get a job in 6 months, we can rely on my salary and our EF.”

  6. First, big congrats on two interviews in this economy! I don’t think it’s a bad idea to pull back on the 401K for a while and stockpile some cash, especially considering how volatile everything is. I contribute 6 percent to mine (the max that my company matches) and I’m fine with that for now. I’m more interested in beefing up my e-fund.

    OT: would you consider doing a post on how you successfully snagged an interview cross-country? My BF and I are trying to GET to California but I haven’t received much of a response from my job applications.

  7. This is a little bit of an “emotional” response, but I’d probably start socking away a little bit more cash. I’m not sure how much you have – but when you have only 1/2 the income coming in if Chad can’t find a job in the time span that he expects, the extra cash will help a lot – you might never even need to touch it, but just knowing that it’s there will help decrease the stress and anxiety. I think job markets outside of CA are a *little* bit better on the aggregate, but unemployment is only going to go up. Won’t peak until 2010.

  8. […] Earn the full match on my 401K contributions. I actually came within $150 of maxing this out.  I did consider scaling my contribution back, but a lot of people here convinced me not to.  This was definitely the right decision: with Chad […]

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