1. You’re Starting A Business
Starting a business is very time and resource intensive. Trying to juggle your personal life, your health, family obligation, and retirement investing all at the same time could just lead to burnout. Skip saving for retirement during this hectic time in order to keep more money at your disposal now, as opposed to decades from now.
This is the time to give retirement savings a break. Wait 1-2 years and resume when your situation is less hectic. Hopefully your income, too, will be more predictable which makes saving much easier.
Also, with your own business you are able to save a lot more in your retirement accounts and you are able to write off a lot more against your income. It won’t be hard to make up for those couple of years of not saving for retirement.
2. When You’re Saving For An Emergency Fund
As I have learned the hard way, your emergency fund should take precedence above all your other financial commitments – well, other than paying your mortgage so you don’t get kicked out on your ass.
An insufficient EF is a good reason to hold off on saving for retirement.
Thanks to our high income as healthcare professionals, money can accumulate rapidly in an account. Make the emergency fund your priority and put off any retirement savings until you have the stash you need.
3. When You’re Changing Careers
Whether you’re changing jobs or changing careers, it’s a taxing transition. It’s more important to acclimate to the new situation than it is to be diligent about saving for retirement.
Especially when you’re going from a medical career to something non-medical, take your time and don’t rush. Hopefully you are making this decision willingly which means that earning money is no longer a chore.
You’ll know when it’s time to start saving for your retirement again. Until then, enjoy the transition whilst enjoying less financial pressure.
4. If You’re Planning On Paying Off Debt
For some it’s normal to carry a debt balance as they aren’t in a particular rush to pay it off. It can even make sense to carry certain debts for their tax benefits or interest arbitrage.
For others, debt is an emotional burden and their main goal is to be debt-free, ASAP.
You can take 1-2 years to focus on debt-payback and hold off on saving for retirement. However, if you think your debt will need 4-5 years to be paid off then it’s better to save just a little in order to not lose out on the power of compounding returns.
5. When You’ve Finished Saving For Retirement
I don’t think I’m alone in feeling that we are constantly pushed to have more, experience more, save more, and achieve more. At age 39, I’m starting to appreciate mediocrity.
The utility of excess wealth is important to consider individually and you’re trading free time in order to have more in your retirement accounts. It’s worthwhile to recognize that eventual point when you are done with saving for retirement – that’s when it’s time to sit back, relax, and be a full-time investor, shuffling your funds around as needed to grow your wealth.
My time would be far better spent searching for something lucrative to do that I enjoy and which earns me enough money to cover my overhead. Doing that for the next 30 years without touching my retirement funds means I would have a retirement balance of more than $2.5M in today’s dollars.