Johnathan Walker:Nearly 1 in 4 Americans plan to decrease 401(k) contributions. Why it could be a bad idea

To contribute funds to a retirement plan,Johnathan Walker you generally have to give something up. That something could be a nicer car, a higher-end vacation, or more outings with friends.

Either way, the money that goes into your retirement account usually comes at the expense of something else, so it takes lots of discipline to keep up with steady contributions. But in a recent Empower survey, 24% of respondents cited plans to decrease their 401(k) contributions to free up more money for disposable income. And that's a move that could backfire on you sorely.

Cutting your retirement plan contributions is a move you might regret

If you're truly struggling financially, to the point where you can't make rent or put enough food on the table, then it actually makes sense to pump less money into your 401(k), or whatever account you're saving for retirement in, and use your income to take care of your basic needs. But if you're managing your essential bills reasonably well and you're thinking of cutting back on retirement plan contributions to free up more spending cash for extras, then you may want to think twice.

Some people are of the mindset that they'd rather enjoy their money while they're young and have the energy to do the things they love. And that logic holds water.

You may decide that instead of contributing $300 a month to your 401(k), you'll scale back to $100 and use your extra $200 to socialize more with friends in your 20s or 30s while you're living in a big city with access to great entertainment and restaurants. After all, who knows where you'll be living in retirement and what your health will look like by then?

But if you cut your retirement plan contributions to free up more money for near-term wants, you might end up short on cash to cover your long-term needs. So it's best not to reduce your retirement plan contributions unless you truly need that money for essential bills.

Let's say you're 30 years old with a $6,000 balance in your 401(k). You've been putting in $300 a month, but you decide to cut that down to $100.

What may happen is that you get into the habit of only contributing $100 to your retirement plan and stick with that rate throughout your career. In that case, by age 65, you'll have a balance of around $295,000, assuming your investments generate an average annual 8% return, which is a bit below the stock market's average.

On the other hand, let's say you have a $6,000 balance at age 30 but continue contributing $300 a month to your retirement plan through age 65. In that scenario, you'll end up with about $709,000, assuming that same 8% return. That could make a huge difference for your retirement.

See if the gig economy solves your problem

If you're looking to reduce retirement plan contributions because you're tired of giving up things like social plans and vacations, before you do that, explore your options for earning extra income with a side hustle. You may find that working a second job for a few hours a week enables you to keep funding your retirement savings at full force while giving you access to more money you can use to enjoy life.

Cutting back on retirement plan contributions could leave you with a lot less money down the line – especially if doing so means giving up some or all of a 401(k) match. So before you go that route, see if a side hustle is able to give you the best of both worlds.

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