Continue Roth contributions during unemployment?

[red92s]

Laid off at the beginning of October. Job search is progressing but no offers I've chosen to accept yet. Unemployment pays me $555/week after taxes. Also collecting severance to the tune of $400/week but that dries up this week. Currently have ~$13,000 in savings, $27k in 401(K) and $5k in my Vanguard Roth. 26 years old. Moved home when I lost my job, so my expenses are minimal. Zero debt of any sort.

I was contributing $300/mo to my Roth when I was working. I feel "guilty" about not continuing retirement contributions now, since it was always drilled into my head that it was a necessity. But, being unemployed, I'm feeling it might be a better idea to sock everything I can into savings. . . . just in case it takes longer than a couple months to find a new job.

[disneysteve]

being unemployed, I'm feeling it might be a better idea to sock everything I can into savings. . . . just in case it takes longer than a couple months to find a new job.

I agree. You always have the option of putting in a lump sum once you get back to work to catch up if your savings allow. You have until April 15, 2010 to contribute for 2009 so you've got some time.

[Joan.of.the.Arch]

Yes, add to your cash savings right now....just in case the job hunt is as slow as it might be. Good luck on finding another job pronto. Bravo for a family that pulls together in tough times as yours is.

[Slug]

^^^^ Yeah, exactly what they said! Good luck.

[wincrasher]

Yes, keep saving, but don't tie up money in your Roth. A new job may take you to far away places, so you might need the money to start a new life.

You are fortunate to be in such good shape and to get so much in unemployment and severance.

Good luck with the job hunt!

[LuxLiving]

We have chosen a similar route. I have saved back what we would normally have put into his Roth this year if Hubster was working. If we need it, we can use it, if not we'll be making a lump sum contribution before the April deadline. Maybe not ideal in opportunity costs we may have missed out on this year, but I felt better keeping the money accessible as I was unsure just how we were going to be able to undergo the income shortgage.

[watsoninc]

I agree

I certainly agree to build up your savings right now, and to catch up with contributions once you find employment. Without a job, you "kind of" have an emergency, especially if it lasts (I realize you moved back home). A temporary suspension of contributions is reasonable.

[MonkeyMama]

I wouldn't sweat it, at all.

The nice thing is that you don't need to make a final decision until April 15th. LEt it go for now, and evaluate your situation later.

[red92s]

You have until April 15, 2010 to contribute for 2009 so you've got some time.

Ah, I had forgotten about this fact which yourself and others were quick enough to point out. Hopefully by next April I will be back on a payroll and eligible for an employer sponsored retirement plan again, and will have a substantially fattened savings account to make a lump sum Roth deposit as well.

I count myself VERY fortunate to have parents with essentially an empty floor of their house available to me, who are willing to accept manual labor, dog care, and errand running in lieu of rent payments. I'll probably come OUT of unemployment with about DOUBLE the amount in savings as I had when I was laid off.