Hi all, I’m currently an E-7 with over 15 years of service. Married with kids.
Long story short, due to life circumstances and ignorance of finances, I didn’t become debt free and start saving for retirement until about 5 years ago.
I started with 10% and then bumped up TSP contributions to 15% to help make up some of that lost time. However, me and my spouse are on our own, there’s no family safety net to lend us a hand in case of shit hitting the fan in any way, shape, or form. For that reason I didn’t like having all that money locked up in TSP.
We’ve been living frugally the last 5 years and I ended up with extra funds. I went ahead and opened up a Roth IRA for 3 reasons: I can use those extra funds to help me increase retirement savings, I can pull out contributions at anytime if shit hits the fan unlike TSP, and after retirement I can rollover my TSP and pull those contributions too if shit really really hits the fan.
All together Roth IRA and TSP, I’m contributing just over $1400 a month towards retirement.
I max out the IRA at the beginning of the year in a lump sum, then I save monthly for next year’s contribution. I do that by putting the monthly amount into a HYSA that I keep my emergency fund in. Anything left after that goes to a brokerage.
I have: ~80K combined in Roth IRA and TSP. 10K in emergency fund. 14K in brokerage (to replace cars and support an eventual home purchase).
After a lot of consideration, I think that I’m saving too much for retirement. In about 5 years I will need housing, so I think I should be saving more for that.
Should I reduce my retirement contributions and redirect funds to an account specifically for housing or keep doing what I’m doing and pull out IRA contributions as needed?
Saving for home vs Retirement
byu/Illustrious-Kick-683 inMilitaryFinance
Posted by Illustrious-Kick-683
2 Comments
A good rule of thumb is not investing money you plan to use for something else in the next 5 years
It depends on a couple of factors:
Are you planning on working after you retire?
I love my job, so I plan to continue doing the same work after I retire, but as a civilian. The pay is so good that worrying excessively about a 401(k) and long-term retirement feels unnecessary at that point. Beyond that, it would just be greed.
Does your wife work, and if so, how long does she plan to work?
The new high middle class is built on dual-income households. If your wife is not working, finding something that brings in additional income is important.
Have you decided where you want to buy a house in the future?
Location will determine how much you need to afford a home. Here in Maryland, it’s a challenge. In Texas, I could buy a house in cash. That’s a huge difference.
Have you discussed the future with your spouse?
What each of you wants can be completely different. My spouse mainly wants a house, so that has become more important to me right now.
TSPs and 401(k)s are long-term investments in yourself. You could easily argue that buying a house falls into the same category. For me, purchasing a home is the higher priority..