Get expert advice delivered straight to your inbox.

Skip to Main Content

When You Should Stop Investing

It’s happened to all of us. You’re cruising down the highway and making great time when all of a sudden you hear a loud POP! Next thing you know, you’re on the side of the road with a flat tire.

That can happen in your financial journey too! When you reach Baby Step 4 and start investing 15% of your income for retirement for the first time, you start to feel the momentum. After all, you’re not bogged down by debt anymore and you have plenty of money in the bank for emergencies. Life is great!

Even for those of you in Baby Step 4, life still happens. And sometimes that means we have to stop investing and fix some stuff before we keep moving forward—otherwise you’ll feel like you’re driving around with a flat tire!   

5 Reasons to (Temporarily) Pause Investing  

Let’s talk about those few times when you might need to push the red pause button on that retirement savings plan. Yes, you heard us right. Here are a few examples of when we recommend you stop investing . . . for a short time!

1. You Have Debt

Okay, if you’ve been investing for any period of time, this might hurt. We get that. But being in debt is like being handcuffed to an iron ball and, in the long run, pushing pause is the best way to get rid of that chain so you can invest even more in your future.

Think about it: Your income is the most important wealth-building tool you have. So if you’ve got your most valuable wealth-building tool tied up in student loans, credit cards or car loans, it’s going to be hard to . . . well, build wealth.

But don’t worry. Once you get rid of that debt, you can resume investing at warp speed! You’ll be truly focused and intense, and nothing will be able to hold you back from where you need to go!

2. You Don’t Have Your Emergency Fund

Hear us loud and clear on this one. Preparing for retirement before you prepare for emergencies is not the best idea. Life happens and, when it does, it’s unexpected. That’s why it’s so important to have a fully funded emergency fund. If you’re already investing and Murphy comes for a visit, it’s okay to take a break.

Think about it this way: If you’re busy building your retirement fund but the roof caves in and you don’t have money set aside for emergencies, you’re going to be up a creek without a paddle. You’ll probably think about dipping into your retirement fund or putting that emergency on a credit card.

Both of those options are going to run you dry.

We suggest taking a step back to Baby Step 3 and saving three to six months of your monthly expenses. Sounds like a lot of money, right? It should be. When life comes knocking, you want to make sure you’re covered without robbing your future.

3. You’re Saving Up for a Home

Okay, technically, saving up a down payment for your home is Baby Step 3b. But for some people, their season to start investing comes before their season to buy a home. So, it's okay to stop investing and pile up cash for your down payment—but do it quickly. 

We’re talking a matter of months to one or two years tops—not a five-year detour. You don’t want to lose momentum for that long. Once you’re finished, get back on track with your retirement plan.

4. You Lose Your Spouse

This isn’t something any of us like to think about, but when your spouse passes away or you go through a divorce, the fact is that your financial picture is going to change. Don't make any important decisions right away—for a couple of reasons.

money bag

Market chaos, inflation, your future—work with a pro to navigate this stuff.

First, you need to give yourself some time to let your emotions settle. Life insurance, inherited retirement funds, and alimony or child support payments will make a big difference in your budget, so you'll need a clear head to handle all that.

Second, it’ll take a while for you to know for sure what your financial picture looks like. How much life insurance is there? Will you be receiving or paying child support? How much?

Keep the bills paid and food in the fridge but put any major money issues such as new investing decisions on hold until you have the answers to these questions.

5. Other Major Life Events

In the case of a job loss or major medical event, you may find yourself temporarily living off your emergency fund. Great! You heard us right. That's what it's there for. 

But any time you drain your emergency fund, your top priority is to replace that money as soon as you can. Why? Back to reason No. 2: Stop investing until you get back to work and can rebuild your emergency fund. Then you’re ready to jump back into your investing plan.

To temporarily stop investing through your employer's retirement plan, just let your human resources department know you need to stop making contributions, and they'll have a few forms for you to fill out. Same goes for your investment advisor.

Remember, though, this is not a permanent situation.

You want to get back to investing as quickly as possible. So set your goals and get intense about meeting them and getting back in the game.

Get Where You Want to Be Faster

Listen. When any part of your income goes toward paying off the past (aka debt), it can’t go toward the future (emergency savings, retirement, etc.). So, take back your income. All. Of. It.

The retirement of your dreams doesn’t have to stay a dream. You can retire a Baby Steps Millionaire. And you can have a savings account ready for whatever life throws at you. And you can be debt-free and in control of every single dollar of your income. You just need to follow the steps. In order.

If you’re ready to knock out your debt so you can start investing, Financial Peace University will show you how—step by step. You’ll learn how to take control of your money and make confident decisions for your future so you can get where you want to be fasterStart Financial Peace University right now! It’s time to ditch the payments—because the sooner you’re debt-free, the sooner you can start investing and the more wealth you can build.

Make an Investment Plan With a Pro

SmartVestor shows you up to five investing professionals in your area for free. No commitments, no hidden fees.

Find Your Pros

This article provides general guidelines about investing topics. Your situation may be unique. To discuss a plan for your situation, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros. 

Did you find this article helpful? Share it!

Ramsey Solutions

About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

Related Articles

how to start investing

How to Start Investing in 2024: A Beginner’s Guide

Starting your investing journey can be overwhelming, but following a game plan can take a lot of the stress out of the equation. Let’s look at investing for beginners so you can start saving!

Ramsey Ramsey
How to Open a Roth IRA

How to Open a Roth IRA

A Roth IRA is a retirement account that gives you a ton of investment options and lets your retirement savings grow tax-free! But how do you open a Roth IRA? Let’s talk about it.

Ramsey Ramsey