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Should I stop contributing to my 401(k)?

Posted by Jill Boynton  March 4, 2009 10:00 AM

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“I’ve always contributed to my 401(k), but I want to retire in 10 years and I’m so upset about the losses in this account over the last year that I’ve stopped contributing. Was that the right thing to do?”

This is a question I’ve heard from many investors who have seen their retirement account values shrink drastically in the past year. I’m sure you are worried that you are throwing good money after bad by continuing to add to your company retirement plan.

However there are several reasons why you should not stop contributing even if you don’t want to put money into the stock market. First of all if you don’t contribute you won’t get a tax deduction, which for most workers is anywhere from 15 percent to 33 percent of the contribution. In addition if your company matches contributions you are giving up some free money. So by all means please restart your contributions. Depending on how many pay periods you’ve missed you’ll need to increase the amount you contribute per period so that you reach the maximum of $16,500 ($22,000 for those age 50 or older) by year-end.

If you don’t want to put your contributions into equities, direct your money into a money market fund or stable value fund. Then when you feel more comfortable you can transfer this money into mutual funds that buy stocks.

Whether you are one year, ten years or twenty years from retirement you should continue to add to your retirement accounts. Tax deferral is a powerful contributor to wealth.

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

About the contributors

D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit
Financial Planning Association™ of Massachusetts has 900 members who specialize in the financial planning process. Many of its members engage in philanthropic pro bono work in their communities, recommend legislation, elevate public awareness, promote financial literacy, and advocate for sound economic and tax policies.
Odysseas Papadimitriou is the founder of, a credit card and gift card marketplace, and, a personal finance site. He has more than 13 years of experience in the personal finance industry, and previously served as senior director at Capital One.

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