Saving for a downpayment on a house. Should I hold off on 401k contributions until I buy it, or still keep contributing (I'd be able to do both)? I don't get a match in the 401k. Also, someone told me to save in the 401k because I can take out a loan for a home purchase.
2006-10-10 21:44:27 · 4 answers · asked by Viceroy of Jello 1 in Business & Finance ➔ Renting & Real Estate
keep saving to the 401k my grandmother put hers into a downpayment for a house and she had nothing left after the market went down. She is broke and wishes she never spent her 401 I dont recommend you do.
2006-10-10 21:53:37 · answer #1 · answered by Southie9 5 · 0⤊ 0⤋
First of all if your not being match by your company on the 401K don't do it at all, when you reach the age to withdraw from your account, taxes will be 5 times higher and theere goes your money, 401Ks were design to generate taxes and help companies get away from traditional pensions. Go to a roth ira at least and see a financial planner. NO! do not stop saving, prepare a budget,Prepare a budget. Follow your budget, then buy your house. If you want to save for a down that is fine but homes will increase in value over time and always do. Even the worst down turns have not lasted more than 4 years.
2006-10-11 03:32:40 · answer #2 · answered by Dave C 2 · 0⤊ 0⤋
Never spend or borrow against your 401K. You won't have enough money, as it is, during retirement, because Social Security and Medicare will both become bankrupt in our lifetimes.
Don't stop contributing to your 401K while saving for the down payment on your house. You need to make sure that you can afford to continue to make your 401K contributions after you're saddled with a mortgage. Again, unless you are saving 20% or more of your pre-tax salary, you won't have enough money, during retirement, to live a comfortable life.
Remember, inflation eats away at anything you save. You will be LUCKY if the interest you receive on your savings manages to keep pace with inflation. More likely, it won't. That's why it's imperative that you save at least 20% of your pre-tax salary every year, until you retire.
2006-10-10 22:55:43 · answer #3 · answered by Larry Powers 3 · 1⤊ 1⤋
http://forums.kiplinger.com/showthread.php?t=1220
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B515B0087-1355-4CA8-8033-3064F2912B4C%7D&siteid=mktw&dist=nwhpf
Hope that helps helped me
2006-10-12 10:12:13 · answer #4 · answered by Olim00 1 · 0⤊ 0⤋