401K: Continue Contributions or Stop?

[Matt Hangsleben]

I recently purchased my first rental property with no money down.  I did so by necessity as I am cash broke!  However, I do put a substantial amount of money into my 401K account every pay check.  I have always been relying on having a very nice nest egg waiting for me when I retire, but like many of you, am starting to realize that I don't want to wait until I am 65 to enjoy it. 

For the last 10 years I have been so focused on building up my 401K, but now for the 1st time I am really considering stopping all contributions to focus on real estate investing.  I ran the calculations and found that my projected 401K value when I retire will be cut in half if I stop contributing now (age 36) and leave what I have in there.

I'm looking for advice!  Have any of you taken the plunge yet, how has your experience been?  Any recommendations???  Thank you!!!

Matt

[Tahra Wright]

@Matt Hangsleben this is a tough question.  I stopped contributing to mine years ago when I learned at a financial education seminar that if the employer doesn't match, it doesn't make sense to keep contributing to the max amount.  If your employer matches, I would continue to contribute, but lower the contribution.  If you do that, however, you need to take the additional monies that you now have (after taxes now) and put it into a fund that you will use for some other investment.  It's far too easy to spend it.  The idea is that through your real estate and other investments, you won't even have to dip into that 401(K) later on, so the fact that it will be far less won't be an issue.  But that really depends on how you plan to ramp up your investing.  If I were you (and I did this) I would consult with a registered investment adviser about overall wealth planning and your goals...and I don't mean a financial advisor..there is a difference.  You don't want someone trying to sell you products, you want someone trying to help you analyze your current status, where you want to go and how much you will need.