How much % should I contribute to my non-taxable accounts to save for a downpayment?

Submitted by badboyzpwns t3_z8to85 in personalfinance

Hey all,

I'm a Canadian planning to work and stay in NYC very long term as a software engineer.

What do you guys think on how much % I should contribute to my non-taxable accounts if I want to buy a 500k USD condo? I will contribute 15% of my income regardless.

Retirement date: 65, I love what I do! believe at that age ageism will be a strong factor and I might not be able to continue my job haha.

Take home income: 60k USD right now. I plan to move in 1.5 years, will not be moving until I get a higher salary, which is very likely since the US job market pays more.

Current lifestyle expenses: 12k (no vacation), 17k (if I vacation)

Currently saved (disredgarding equities in stock): 100k USD

Expect purchase date: Minimum 4 years from now. Very flexible, I need to discover what neighborhoods I prefer by renting, but I have a good idea on which I'll like.

How much do I need for downpayment: 40-50% seems nice to keep a peace of mind. If we go wwth 50% Based on street easy, mortgage amount will be 250k, HOA will be ~400, Monthly tax ~280. Totaling ~ 2,200 per month

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Werewolfdad t1_iyd6092 wrote

As much as you can afford. A $500k condo in NYC may be quite unaffordable for you for quite some time unless you get a very large pay increase

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h974974 t1_iyd9j72 wrote

To be completely honest with an income of 60k nyc is completely out of reach unless you have a roommate or partner. I sold my place because my taxes were incredibly high and the yearly maintenance was rough. Currently pay $3100 in rent (since 2018 and rent has not been raised) making over double your salary and barely staying afloat. Save as much as you can and don't buy above your means- something I wish I'd listened to years ago

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[deleted] t1_iyd7oqq wrote

[deleted]

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WorstPapaGamer t1_iyddh8d wrote

OP already has 100k saved up. OP is looking to save 200-250k over 4-5 years so they would have to save 40k a year.

According to their budget they can save that since take home is 60k - 12 or 17k.

Plus their job definitely pays well depending on How much experience they have.

Overall seems like they live on a great budget in a HCOL area. They’re good with saving. Work in a field where you can get a high salary fairly easily.

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Main-Inflation4945 t1_iye65tf wrote

If their take home is $60k, that means only $5k per month to cover all of their expenses, while also having enough left over to save. I don't see OP saving $200k or even half that in 4 to 5 years as the math simply does not work.

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WorstPapaGamer t1_iye6uic wrote

OP says that their expenses are 12k or 17k (I’m assuming a year) so their expenses per month is roughly 1000-1400 (I don’t know how but that’s the data they’re providing).

That’s the only reason why I said that with this data it sounds like they could save that.

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kbc87 t1_iyd6hfh wrote

Save as much as possible but you need to focus more on getting your income up to afford a $500k condo.

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EcrofLeinad t1_iydep17 wrote

You seem to be conflating two separate investment categories, or this is a question too Canadian for me to understand. Tax advantaged (none are tax free that I am aware of) accounts (in the US) are typically specific to retirement savings and have withdrawn penalties if used too soon. Saving for a down payment on a living space would typically be done with a fixed income asset over a short timeframe (less than 5 years). In this case I would say high-yield savings account (HYSA). Maybe a certificate of deposit (CD) or directly held bonds or treasury notes. Again, I’m not sure what is available to a Canadian.

Generic advice for retirement savings (ideally into a tax advantaged account) is to save 15% of your earned income per year over your working career. That way, as long as you invest it wisely (don’t take too many risks) you will have enough to retire by the time you’re in your 60s. Remember though that 15% is generic and not a good fit for every situation.

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Main-Inflation4945 t1_iye6gk2 wrote

I recommend checking out Street Easy.com to get a realistic sense of what apartments cost in NYC. $500k might buy a studio, but $400/mo for HOA is unrealistically low; you'd have to double or triple it. https://streeteasy.com/

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