Should You Stop Saving for Retirement and Hoard Cash?

The month of April has been a pretty wild one as far as the stock market and economy are concerned. Tariff policies announced earlier in the month send stock values plunging. And while there’s been back and forth in terms of tariff enforcement and market movement, all told, a lot of people are currently unhappy with where their portfolios stand.

There’s also more general uncertainty in the context of the broad economy. A number of financial experts have upped the odds of a near-term recession. And there’s concern that tariffs will drive prices upward, leading to lingering or worsening inflation. An uptick in unemployment is also a possibility.

At a time like this, you may be tempted to stop funding your retirement savings and hoard cash instead. But while it’s a good idea to try to boost your emergency fund, it’s not wise to start letting your retirement savings fall by the wayside.

Don’t lose sight of the big picture

It’s easy to see why you’d want to stop saving for retirement right about now. Stocks are a nightmare and you may be worried about losing your job if the economy sours.

But one thing you should remember is that stock market volatility is normal, and that you need stocks to help grow your nest egg in the long run. Also, a great time to add stocks to your retirement portfolio is when the market is down. If you can load up on quality stocks at a discount, you stand to make money over time as the market improves.

You should also remember that there can be tax benefits to funding a retirement account. Traditional IRA and 401(k) plan contributions exempt some of your income from taxes. If you decide to stop funding one of these accounts to hang onto more cash instead, you could end up owing the IRS more money than you’d like to.

Boost your cash savings, but stick to your long-term plans

Given the state of the stock market and economy, now’s not a bad time to assess your emergency savings. You should ideally have enough of a cushion to cover three months of essential bills at a minimum, because if you end up out of a job, it could easily take that long to find another.

If you don’t have a three-month emergency fund, then it’s a good idea to stockpile some cash in the coming months until you reach that point. But once you’re comfortable with your level of emergency savings, you should continue to prioritize your retirement savings and buy stocks for your long-term portfolio.

At the same time, though, make sure your portfolio is well diversified. While that won’t completely protect you from losses, it could help minimize them during periods of market turbulence.

You should also make sure your portfolio is age-appropriate. If you’re inching closer to retirement, it may be time to start scaling back on stocks. But that doesn’t mean that you should abandon stocks — or your savings efforts.

It’s important to stick to your original game plan if you want to be able to enjoy a comfortable retirement down the line. If you let current market events spook you, you risk ending up with a shortfall later in life.