The start of a new year is a great time to hold yourself accountable for meeting financial goals. And one of your goals may be to increase your retirement savings rate.

If you have a 401(k) plan through your job, you might assume that pumping more money into it is your best bet for 2025. But here are a few reasons not to increase your 401(k) contributions this year.

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1. You want to retire early

The average retirement age in the U.S. is 62. But that doesn’t mean it makes sense for you to toil away that long.

Maybe you’re a 40-something employee who’s been plugging away in the same industry for 20 years and getting more burned out by the day. Or maybe you have a parent who passed away at a young age, and you’re committed to retiring early because of that.

No matter your reason for wanting to wrap up your career on the early side, you should know that 401(k) plans generally impose a 10% penalty for withdrawals taken prior to age 59 1/2. In some cases, you may be able to access your 401(k) penalty-free as early as age 55. But if you have your eyes on an even earlier retirement, then instead of increasing your 401(k) contributions this year, you may want to invest more money in a taxable brokerage account.

Clearly, you won’t get the same benefit as funding a 401(k) because the money you put in won’t exempt some of your earnings from taxes. But you will get the option to withdraw funds from your account at whatever age you want.

2. You don’t have an emergency fund you’re happy with

Will the economy strengthen or worsen in the coming year? It’s anybody’s guess. A Gallup poll reveals that 54% of Americans expect employment to increase in 2025. But on the flip side, 45% of Americans expect unemployment to rise. The more confident you are in your personal emergency fund, the less you might have to worry about the latter.

If you’re not particularly happy with your emergency fund, then that’s reason alone to not increase your 401(k) contributions this year and, instead, boost your regular savings. The good news is that, even with a few rate cuts on the part of the Fed, some high-yield savings accounts are still paying pretty generously. If you shop around, you might find a rate that you’re happy with for your near-term savings.

3. Your employer’s plan has its share of shortcomings

Not all 401(k)s are created equal. Some plans offer a wider range of investment choices than others, and the administrative fees you’re charged can vary. But if your employer’s 401(k) leaves much to be desired on both accounts, then you may not want to fund your 401(k) beyond your workplace match.

If your 401(k) doesn’t offer investment choices that you’re content with — say, because you’d rather invest in individual stocks, which most 401(k)s don’t allow for — then you may want to reserve some of your money for an IRA. And if your 401(k)’s administrative fees well exceed 1%, you may want to run the other way.

You might think that increasing your 401(k) contributions is one of the wisest financial moves you could make this year. But before you filter all of your extra cash into a 401(k), think about whether there’s a better option. It almost always pays to contribute enough to a 401(k) to claim an employer match in its entirety. But beyond that, there could be serious benefits to putting your money elsewhere.

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