- posted 10 years ago
I am a single, employed person who recently turned 50, making me eligible for catch-up contributions to my 401(K), but my annual income has recently declined, from about $110K to about $90K. I very much want to contribute as much pre-tax money as possible to the 401(K), but the reduction in income has made that exceedingly difficult.
One possible solution is to dip into my non-retirement investments/savings to help with living expenses, to make up for the decline of take-home pay due to larger pre-tax 401(K) deferrals (maxing out on the catch-up amounts).
Assuming that I don?t have other needs/plans for the non-retirement investments, is this a sound strategy? It seems to me that the net effect is that I?m transferring non-retirement investments to retirement investments, which, in theory, would seem to be a good thing. Am I wrong?
Thanks for any replies.
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