In an ideal world, you would have enough money to fund both your retirement and everything else in your life. However, in reality, you often have to make decisions because your income rarely, if ever, satisfies every single need you have. For a lot of working Americans, the decision sometimes comes down to something you need soon, perhaps a home, and something you won’t realize for many years, such as retirement. Let me outline an approach I used to save for my retirement and come up with funds for an immediate need. In my case, the immediate need was some down payment funds for a home.
What it comes down to is priority and the immediate priority is a down payment for a home so many people just cut off retirement savings. I recommend that you reduce your retirement savings to the bare minimum and then focus on your other goal. In my case, I dropped my 401(k) contributions to the minimum that would ensure I received the company match. From there, I decided that contributing the full $4,000 (at the time, now it’s $5,000) limit for my Roth IRA was going to be important as well. I predicted that one day, hopefully, my income would exceed the contribution limits so I should get my contributions in while I still could.
So, I was able to save up some money for a down payment on a home and ratchet down my retirement contributions without, hopefully, causing much long term harm.