When it comes to saving for retirement or for a home, which should you choose?
After 13 years of marriage and renting, David Teicher, 34, and his wife decided to take a break from retirement saving so they could buy a home. It had always been a goal of theirs, but they needed a little more free cash to make it happen.
Typical financial advice may suggest contributing to a retirement account and also a savings account for a down payment, but not everyone has enough funds to do both, on top of the other living expenses they have to pay for . “It is fairly common that people have more goals than resources, especially at the beginning of their careers,” said Howard Pressman, partner at EBW Financial Planning in Vienna, Va. As with most other financial goals, young adults will have to find a balance, he said.
For those still strapped and unable to put away money for both lofty goals, it’s OK to prioritize home buying over retirement spending for a short while, Pressman said. “But know that as soon as your house savings goal is met, savings needs to be directed back to retirement and that you may need to increase savings even more later in your career to make up for the lost years,” he said.
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