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House or retirement

May 12th, 2007 at 05:43 pm

So, with the wedding rapidly approaching, finances have been a recurring theme for discussion with the fiance and I. I have been thinking lately - I do not currently have a 401K, so I put money into an IRA monthly right now. We are trying to save for a house in addition to the wedding. We took two roommates specifically to reduce monthly expenses, so we could save - between the two of us we should be saving $200-250/month. My latest thought though is this - should I suspend my IRA contribution for the next 10 to 12 months and divert those funds into the downpayment fund. That would give us an extra $100/month to save. I'm just wondering if this is wise. My gut tells me it is. I can always redivert that money into the IRA should anything happen, and my fiance contributes 10% to his 401K, with a 150% match on the first 6%, which amounts to a contribution of 19% overall. I'll be discussing this with him in the next few days. This 'we' instead of 'i' thing is harder than it seems.

7 Responses to “House or retirement”

  1. Amber Says:

    I do not have a 401k either and also deposit money into an IRA that is the best thing for me right now. I wouldn't suspend the contributions but I would probably decreased the amount temporarily

    good luck

  2. disneysteve Says:

    You need to start looking at both incomes as if they were one. So when you look at his 401K contribution, don't think of it as 10% of "his" income, figure out what percentage it is of your total household income. Ultimately, you should shoot for at least 10% of ALL income going into retirement savings.

    Are you contributing to a Roth or a traditional IRA? If it is a Roth, keep contributing as contributions (but not earnings) can be withdrawn at any time for any reason. If you need that money for the downpayment, you can get it. If not, it will already be in the Roth growing for retirement.

  3. creditcardfree Says:

    When I was married I wasn't contributed to retirement or saving for retirement...so I would do either one!! But looking back, I think I would divert money for a downpayment or an emergency fund for a short period of time. The less you borrow for 30 years the better!! But, of course, the more you invest for 30 years the better, too!! Either answer will be right. Good luck!!

  4. lieweheksie Says:

    Try and do both- I dont think this is an either or situation
    Also very NB to make sure YOU have enough for retirement- joint is good but make sure you dont neglect your own savings
    Maybe see if you can get help financing those gorgeous expensive bundles of love and fur

  5. Carolina Bound Says:

    I agree that you should do both. I think it's very important that your retirement savings be steady and continuous. It will be a huge part of your life someday. Of course you want to save for a house, too. When I bought my house, I borrowed from my retirement savings for the down payment. Not sure if it was the smartest thing to do, but it got me the house. I wish I had saved a for down payment, though.

  6. scfr Says:

    What if your DH-to-be reduced his 401K contribution from 10% to the 6% necessary to get the full employer match and saved the 4% difference toward a down payment on a home?

    You could continue to contribute to your IRA, and you would be covering both goals at once.

  7. monkeymama Says:

    I think that conventional wisdom is retirement is better. BUT it really depends. We saved our all to get into a house right away and was the best ting we ever did - don't regret it in the least. OF course we have the benefit of oodles of equity. But I keep hearing sometimes calculated risks pay off. Since we are not risky people, this is probably one of the riskier things we have done that has paid off tenfold.

    That being said, the market is really in a slump right now. I am not sure there would be a huge hurry. In our case we couldn't save a down payment fast enough, and waiting would have completely and utterly priced us out for a LONG time. IT depends on your situation. I am thinking odds are though housing is in a slump where you live?

    Doing both is probably wisest.

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