I’m 25, married, with combined income of $120,000 in southern CA. Should I contribute money to my company’s 401k (I don’t need to contribute anything to recieve full employer contribution), my ROTH IRA, or save for a down payment on a house?
Clyde
Save for retirement or house down payment?
I’m 25, married, with combined income of $120,000 in southern CA. Should I contribute money to my company’s 401k (I don’t need to contribute anything to recieve full employer contribution), my ROTH IRA, or save for a down payment on a house?
Clyde
{ 7 comments… read them below or add one }
April
I would save for a down payment on a house. If you are currently renting you are “buyng air”.
Hazel
put some in each account. save while you can next week you could be unemployed
Susan
try to do both. even if you only contribute 1% of your check to the 401k it works. at my company you can take a loan against your 401k or at a later date withdrawl from the 401k to by a house.
it helps alot if you chooses the later. Does your company match you contribution. if so i would invest as much as the company will match in the 401k and pull the money out in a few years to buy the home.
Carol
#1 Debt - pay off all your long-term debts and pay off credit cards in full each month. None of it is tax-deductible
#2 House. Prices are falling so you will get more for your money.
#3 Retirement - after buying your house and you stabilize your monthly budget for a couple of quarters
#4 Childrens’ college education - lots of options in the future: scholarships, grants, state colleges, work-study programs, etc.
Jamie
With $120k in earnings there is no reason you shouldn’t be able to both contribute to your 401k AND save for a house. Remeber, the 401k dollars are taken out pre-tax. As a result, you will see only a minor hit in your bottom line if you make the contribution.
So again, not sure why it is an either/or decision. Living in CA myself I know it is possible to do both- you may just have to cut back on other expenses if that is really an issue.
Gertrude
You should at least max out your Roth each year. Then the rest can go towards saving for a home. You aren’t going to want to buy in that area any time soon anyway and you don’t want to miss out on retirement savings.
Jacob
you are only 25 years old, you have plenty time to save for your retirement. i will buy house .
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