I struggle with this, I've had a few moments where I've considered backing off the 'pay yourself first'. (My wife and I both max our 401ks and IRAs so 18k + 18k + 5.5k + 5.5k) but have managed to hold strong each time these feelings came up over the past few years.
Not mincing words, your current self is robbing your future self if you do this, both in less retirement savings and additional taxes paid. I'd follow these steps.
- Is there anything you can do to cut expenses further than the equivalent dialing back of expenses?
- Even if you can't make up the entire difference, the fact that you feel you need more money means you need to go back and take another hard look at your budget and re-evaluate for extra savings to minimize how much you're robbing your future self..
- Other thing to consider is, if you MUST do this. Set yourself a deadline to get back to a baseline level of expenses and no matter what turn your 401k back to maximum. If you have discipline here it will force you to tighten your belt.
The absolute WORST thing you can do is dial back your 401k contributions and inflate your lifestyle by getting used to all the 'extra' pocket money. You might not intend to do this but it's an easy trap to fall into "Oh our new home is smaller so it wouldn't be all that bad to refurnish!" "We've had our old cars for so long they're about to die, lets get a newer one. We're strapped for cash due to the closing so lets just finance, its 0%!" etc.
Great advice here, and I wanted to emphasize the part that I underlined.
My fiance and I just moved into our house last winter. I had every intent to max my 401k this year and was doing it through April. And then we needed to buy furniture. And then buy a lawnmower. And then a weed wacker. Etc. We budgeted for this, but things just constantly add up.
And then we also had a couple expensive trips. My law school roommate (will be in my wedding) is having his bachelor party in Charleston this very week and then his wedding is out of town in June. And then my undergrad roommate (another guy that will be in my wedding) is having his wedding in Montana. I'm in both of their weddings, so all in all everything is going to cost like $2,500.
Oh, and my fiance and I just got engaged in February. We've been paying for wedding stuff too ($1,300 to rent a venue, $500 deposit for photographer, $500 for DJ, etc.).
I held my guns on my 401k max until April. I've dialed it back from $710 per paycheck (max) to $295 per paycheck. This keeps me on track to save at minimum $10,000 this year. This was only to temporarily calm my nerves a bit so I can afford everything throughout this summer. I think this has been good for my mental well being, because barely scraping by (and actually being slightly negative one month) was causing a ton of stress.
Once this summer is done and I rehabilitate my checking account to have four months of expenses, then I'm going to up my 401k to $800/paycheck and hopefully get at least $15,000 in my 401k this year. I might do even more (even try to get up to the max) if my trips cost less than anticipated.
So my recommendation is ultimately the same as above: make sure this is just a "one off" and you aren't doing anything that leads to increased fixed costs. As as you can go back to maxing, do it.