growing_older
Thinks s/he gets paid by the post
- Joined
- Jun 30, 2007
- Messages
- 2,657
My company has hosted several rounds of layoffs and it is very likely more are coming in a month or two. While I cannot be sure I will lose my job, it seems quite possible. Fortunately, I have enough in Emergency Funds cash to last for quite a long job search, so that worry is taken care of. (This half looking forward to a forced semi-ER is a dangerous attitude.)
What does occur to me is that my ability to move funds into tax advantaged vehicles (like the 401k) will become limited if I have no job. However, my company plan will allow me to raise the percentage I contribute as high as I like. I used to try to spread it out as evenly over the year as possible to capture the company match and to evenly buy the market over the year (DCA). However there is no match this year since company eliminated that Jan 1. I am thinking that stocks are likely to languish here before turning up, but I won't know when that will be, so I would have kept buying as before. Instead, what if I raise my 401k contibution as high as I can stand - to get as much contributed before my qualifying income stream in 2009 is shut off. If I luck out and keep my job, then I'll have bought more in early 2009 instead of evenly over 2009. If I'm right and my job goes away and it takes a while to find a new one, I will have made as much of the 2009 limits allowed into 401k as I can.
I'm less worried about the extra cash I would have been putting in taxable investments getting pushed instead into the 401k, since I have a big enough stash to weather the job loss. I am worried that the 2009 limits for 401k won't wait until I find a new job. If I want to take advantage of them, it might have to be as soon as possible.
I suppose I could redirect the extra 401k contributions into something fixed and then DCA into the market after the job vanishes. But how bad a market timer would it make me if I just let it all get invested according my regular AA, just earlier in the year instead of spread out? Could I regret this if my taxable income for the year turns out to be lower than usual, so the tax deferred 401k doesn't have a much value to me?
What does occur to me is that my ability to move funds into tax advantaged vehicles (like the 401k) will become limited if I have no job. However, my company plan will allow me to raise the percentage I contribute as high as I like. I used to try to spread it out as evenly over the year as possible to capture the company match and to evenly buy the market over the year (DCA). However there is no match this year since company eliminated that Jan 1. I am thinking that stocks are likely to languish here before turning up, but I won't know when that will be, so I would have kept buying as before. Instead, what if I raise my 401k contibution as high as I can stand - to get as much contributed before my qualifying income stream in 2009 is shut off. If I luck out and keep my job, then I'll have bought more in early 2009 instead of evenly over 2009. If I'm right and my job goes away and it takes a while to find a new one, I will have made as much of the 2009 limits allowed into 401k as I can.
I'm less worried about the extra cash I would have been putting in taxable investments getting pushed instead into the 401k, since I have a big enough stash to weather the job loss. I am worried that the 2009 limits for 401k won't wait until I find a new job. If I want to take advantage of them, it might have to be as soon as possible.
I suppose I could redirect the extra 401k contributions into something fixed and then DCA into the market after the job vanishes. But how bad a market timer would it make me if I just let it all get invested according my regular AA, just earlier in the year instead of spread out? Could I regret this if my taxable income for the year turns out to be lower than usual, so the tax deferred 401k doesn't have a much value to me?