I am a 24 year old full time worker, part time college student. I would really like to purchase a home in the next couple of years. Right now I am maxing out my 401k (50% match) but this doesn’t leave me with much to save for a home. I know saving for retirement isn’t on most 24 year olds agendas but I try to be good with money and I’ve heard every dollar saved in your 20’s is 8 times more valuable than one saved in your 50’s. Should I put my 401k on hold and start aggressively saving for a house or continue to load up my retirement money so I can make good use of compound interest. I really don’t make enough to do both. Thanks.
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Should I stop investing for retirement?
Rigo C 9:10 pm on October 6, 2009
For how long do you plan staying at this job?
Invest in your 401k up to the match point (free money yoohoo). If you already left that job by the time you buy your home you can take up to $10,000 + taxes for the down payment on your first home purchase. And you won’t pay penalties on that money. If you already have more than $15,000 invested, and you really want that home stop your contributions and invest your money on a money market account.
Plan on putting 20% for the down payment on your home to avoid PMI, and save $500+ per month ($10,000 from your 401k+whatever is on your money market).
Get a fixed rate, fixed term, and fixed payment mortgage, everything else is garbage.
Good Luck
Jeff 9:10 pm on October 6, 2009
I would put the 401K on hold until I have 20% down for the house.
After I have the house payment ready, I would then put 15% of what I make into retirement.
First, fill up the 401K with as much as they’ll match.
Then fill up a Roth IRA with as much as the govt will allow.
If you still haven’t reached 15%, then put more in the 401K.
bobby d 9:10 pm on October 6, 2009
Put into your 401k up the the amount you get full employer match (that’s like free money). Then, start saving the extra money for the house.
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