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ChiSquare1963 t1_iy6ezv6 wrote

If you have an employer match, you should contribute enough to get the match. If you plan to do 20% down, plan to buy a house with payments under 30% of income, and expect to live in that house for more than five years, it’s okay to drop retirement contributions to match level for a couple of years. Just be sure you re-set to at least 15% of income as soon as you have downpayment & closing costs saved.

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badboyzpwns OP t1_iy6h1s7 wrote

Thank you! I actually saw in the chart that regardless should put in 15% of your income to your 401k - i'm not sure if it's applicable for IRA. This should be done before maxing your 401K/IRA or saving for a downpayment. Why 15%?

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ChiSquare1963 t1_iy72zch wrote

People who consistently invest 15% of income are able to retire in 60s and maintain their standard of living. That 15% can be invested in any retirement account (401k, IRA, 403b, etc). The 401k is the most common, allows you to invest more than IRA each year, and is funded through payroll deduction so you don’t have to remember to transfer funds, so most people recommend funding the 401k first.

If you invest less than 15% for a couple of years, you’ll likely need to invest a little more than 15% later. Ideally, you stick with 15%, but some people need to adjust percentage to save downpayment in a reasonable time period.

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