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Ok, I don't plan to withdraw any money from my 401k account, but I'm thinking of not contributing for a year or so.... just so that we can get into a nice house.... maybe we will re-start it after 1-2 yrs.... is that a good idea ?
I am 34.
I think you should always at least be putting away the maximum to achieve full matching in your 401k, especially now that the stock market is down. It's likely going down again from here, after a somewhat overbought spring runup. The next few years are probably best the long term (i.e. retirement range) stock buying opportunities that will exist for quite some time.
I'd put away as much as you can in your 401k. If you want you can buy guaranteed asset funds for the immediate future so you can lock in that free money from the matching. Let the decline in home prices take care of affordability for you, and sock that money away for later.
as i reinforce with my kids, financial well being is like fighting a war.... you need money for now, money for the future and your fighting different fronts all at the same time..
pulling from 1 front to shore up another front is a loosing deal.... odds are if you have to make decision between the 2 then you may never be able to afford to do both and ultimatley have a failed retirement.
the next year or 2 may also historically see the biggest gains as we recover from this mess..... nothing even changed yet and markets are up 40% from their march lows.... at an average return of 7-9% a year how many years would you miss in normal gains with a 40% move on that money you didnt put in just this year?
a house is not an investment its a consumption item and costs you money.... the fact it may be worth something when you sell it dosnt mean you made money...
Dosnt sound like a good idea. Dont ruin your future savings just to buy a house. I would opt for a dif house, or maybe look in a different neighborhood. Just my opinion. Good luck
I was very tempted to take a loan out against my 401k when I was buying my house, but I never did it. Looking back, it was a great decision. I don't recommend doing anything with your 401k to get into a house. I think the other posters are correct - this is the time to be buying, when the stock market is on the low side. Also, remember that if you stop contributing to your 401k, the money will be taxed, so you will end up with less in your pocket anyway.
Thanks for the responses guys.... I am not going to take out anything from the 401k (existing) .... I'm just not going to contribute for say an year or two. I know its not something that I want to do, but I think I can get into a great house.... Hmmm....
Thanks for the responses guys.... I am not going to take out anything from the 401k (existing) .... I'm just not going to contribute for say an year or two. I know its not something that I want to do, but I think I can get into a great house.... Hmmm....
Ok, i'm not sure of how your plan works and you can do whatever you want but here is my suggestion.
Currently my plan is I can put in from 2% to 20%. Right now I shaved it down to 2%. Reason is that this is my retirement fund and basically from all the research that I have done, you should always keep putting money into it. Since it is all pre-tax and my company offers matching, I take advantage of it. Is 2% a big deal? No, but to me its better than nothing. I used to do 20% but in order to save for a house I trimmed it down. Did I have to do that? No, I could have taken a loan out on the 401k but I did not want to do that. Its not worth it and that money should not be touched until retirement (or an emergency). If you are allowed to do 2%, then I would suggest doing that so you always have a little bit going in. This has been working fine for me and my paycheck doesn't take that much of a hit. Actually what really kills my paycheck is the federal and state taxes. If I could just have that money back, man I'd be able to get a much better house. Dang gov't.
But again, the choice is up to you. Best of luck to you.
Always contribute the maximum of your employer match. Always. So, bottom line, no, don't stop contributing. Buy the house you can afford while still contributing to your 401K. If you can't afford both, wait till you can afford the contribution and the house.
Always contribute the maximum of your employer match. Always. So, bottom line, no, don't stop contributing. Buy the house you can afford while still contributing to your 401K. If you can't afford both, wait till you can afford the contribution and the house.
have to agree with this very strongly. If you get an employer contribution up to 5% or something like that, it would really be somewhat foolish not to contribute to a minimum of this amount because its basically throwing away free money.
If you stop contributing for three years that can potentially cost you about 228K. Assuming you put away 6% your employer matches 1 for 1 up to 6%, a 3% annual salary increase you will have 21K at a modest 8% after 3 years. That 21K over 30 years would equal 228K at the same 8%.
If you wait until your finances allow for both, lets say in 3 years the market will have recovered (hopefully). So a house that you can get now for 350K may cost you 400K or more, with a possible higher interest rate (lets say a 1% jump). That jump in price and interest could wind up costing you an extra $541 a month.
Now being that you have to pay an extra $541 on your mortgage that's $541 you cant put into your 401K. That $541 can grow to 617K over 27 years at 8%.
So your options are stop contributing for three years, buy house now and lose 228K in your potential 401K balance. Or continue to contribute, buy the house in three years and then lose 617K in potential 401K balance. Your actual lose for waiting and buying is 389K. The 617K lose due to higher payments minus the 228K for continuing to contribute for the prior three years.
Since your lose is greater by waiting your best bet is to buy now. This obviously assumes home values rebound in three years and rates go slightly higher. Ultimately its a gamble either way.
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.... I'm just not going to contribute for say an year or two. I know its not something that I want to do, but I think I can get into a great house.... Hmmm....
