Just because you can do something doesn't mean you should. Like entering a hot dog eating contest, getting a tattoo on your face — or even maxing out your 401(k).
The last one may seem incongruous; after all, numerous studies show Americans feel they aren't saving enough for retirement. And if you have read any personal finance advice, you probably believe the best bet is to save, save, save.
But depending on your financial situation, putting $18,000, the maximum allowable amount for savers younger than 50, into an employer-sponsored retirement account each year may not make sense. Here are three things to consider before maxing out your 401(k).
1. Nonretirement goals.
While you'll be grateful for what you save now once the time comes to retire, it's important to think of the big picture: What other goals do you have between now and then?
Clients regularly ask whether they should max out a 401(k) — and sometimes they are surprised by the answer, said Jeff Weber, a certified financial planner and wealth adviser at Titus Wealth Management.
"Most people think that putting extra money aside for retirement is the best policy," he said. "But we like to take a look at the big picture and make sure they're covered in other areas, too."
As part of the decision process, Weber ticked through a checklist with clients:
Do you have any high-interest credit card debt? If so, pay that off ASAP.