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• 401(k) Fund Selection Guide
• 401(k) FAQs
• "How to handle $"

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Question: that (1%) is their match or contribution? If they match something in the 401k you so should at least do that. Never turn down free money.

Exactly. It’s part of your compensation, one that lots of people leave on the table

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I wouldn’t delay your 401k contributions. You will also be able to find something else to prioritize. Saving for retirement and getting out of non-mortgage debt are critical to being financially prepared (which you mention as the goal).

1. Determine your budget for your house purchase
2. Determine how much you will need for a down payment for said house purchase
3. Save aggressively for # 2

Ideally you are putting 20% down to avoid PMI. If you can’t, then the question becomes how large of a mortgage payment can you afford? The more you put as a down payment, the smaller your mortgage payment will be.

The most important thing about retirement savings is to get in the habit of setting money aside to give it time to grow. It’s difficult to determine if you should or should not contribute without knowing your expenses and the answers to the questions above.

I think of a house investment as another avenue for savings. You should certainly contribute enough to earn any matching funds from your employer.

Edit: There is a $10K exception to the early withdrawal penalty for your first home if you absolutely need the funds from an IRA but no exceptions for the 401K to avoid the 10% penalty in relation to a house purchase.

Almost half of my coworkers don’t contribute to their 401k and refuse to acknowledge that they’re leaving money on the table when I tell them.

Even saving 5% when you’re 29 is dramatically better than saving 10% when you’re 45.

Earlier is better even if it’s 5%

I think you need to balance your own financial priorities, but I have two suggestions to help you do that:

1. Remember the old saying about how you can borrow money to buy a house, but you can't borrow money to retire

2. Use one of those "investment calculator" pages online to see how much money you invest today will be worth when you're old, vs. how much money you invest in e.g. 10 years will be worth when you're old.

Contribute something, even if it’s just a couple percent. You can increase it later.

Ideally you would want to contribute what the company match is.

401k's are mathematically superior net worth vehicles to houses.

However... You can't live in a 401k...

With that said, contributing say 5% (which will lower your take home income by around 5%) is unlikely to materially change your your house savings in a year. At that salary we are talking around $250/mo less (3k/yr less) to save toward the house, which isn't gonna love the needle really on your home purchase decision.

But if you take that pretax $4200 and put it in a 30 yr index fund and are able to return 7% post inflation, it'll become $34k at age 59...

That is such a silly thing, even if you didn't want to save for retirement you could cash it out, pay the penalty and still come out ahead.

Always contribute at least something to your 401k, it will be more difficult to start later

Contribute to at least get the company match - you can withdraw that money as cash later if you must and pay a penalty.

For additional cash on hand, I’d try to have a budget for immediate repairs in the house if they come up in addition to an emergency fund to cover around 6 months of bills and house payments. For example what if the water heater or furnace stops working - do you have the funds to get those running again comfortably?

Also your house payment is usually a little higher than you anticipate because of utilities coming in on top of all of your estimates.

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NO. contribute to the 401K enough to get the maximum match, if any.

If no match, you must contribute something to the 401K so it grows tax free for the next 35 years, since you are 29.

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I think you can borrow against your 401k. U take out a loan against yourself. It's ridiculous. America.

Well… yeah because that 401k balance essentially becomes a bank that you own. So any interest that you owe, is paid back to yourself. It’s pretty good

... what?

Contribute to 401k. Get employer match. Take out loan against 401k for house. Profit.

Although contributing to your 401k is always a good thing, a lot of companies have a vesting period and if you job hop often you’ll miss out on it. My match doesn’t vest at all until the 3 year mark which is pretty bad, other companies are similar

My company is 100% vested from start date.

this is the ideal scenario. sadly the stick and carrot routine is a common trend :(

So if the company provided a 100% match you would contribute 100% of your salary?

I agree with this though but 5% is comically low. I know you are just making a point but folks should be maxing out 401k to the point they can afford.

You are basically putting money away for retirement and lowering your taxable income. Less money paid for taxes and more money in account for retirement- sign me up.

Basically you get to keep more of your money. I would rather make 80k and have 20k going into 401k Vs making 90k and having 8k go into 401k. I like the thought of keeping as much of my money away from income taxes or at least pay the least amount I can due to finagling.