I just bought a house and I’m considering easing up on my retirement savings – is this a bad idea?

Given the cost of housing these days, a lot of people are having to make sacrifices to buy a home of their own. And if buying a home means having to cut back on contributions to your retirement plan, you’re probably not the only person in that boat.

In fact, that’s the situation this Reddit poster is in. They’ve been saving well for retirement and maxing out their 401(k) every year. But now that they’re taking on the expense of a house, that may no longer be in the cards. And they’re wondering whether that’s going to hurt them.

The answer? It depends.

It’s okay to scale back on retirement plan contributions temporarily

I’m a firm believer that while saving for retirement is important, it doesn’t have to be your top financial priority every single minute of your working life. There may be times when you need to prioritize other things, like paying off debt or coping with the many expenses that come with buying a home.

So in this situation, I’d say that if the home is affordable but requires a temporary decline in retirement plan contributions, it’s probably not a big deal — especially if the poster has been diligently funding their 401(k) for many years already and doesn’t necessarily plan to retire too early. I would, however, encourage them to keep funding their 401(k) to a large enough extent to claim their full employer match — because leaving free money on the table is something I’m just not a fan of.

Make sure not to take on too much house

There’s a caveat I need to include with my advice, though. I think it’s fine if the poster cuts their 401(k) contributions for a year or two while they deal with home renovations and the other expenses that come with settling into a house. But I wouldn’t want to see them cut those contributions on a permanent basis. That could mean retiring with a lot less money and having to make uncomfortable sacrifices later on.

If living in their home will require them to cut their 401(k) contributions long term, then I’d encourage them to find a way to make up for the added expense — perhaps by working a second gig for a while until their paycheck increases so they’re able to keep funding their 401(k) at their previous level.

In fact, I’d be remiss if I didn’t put out a reminder that for the most part, it’s best to keep housing costs to 30% of take-home pay or less. Going beyond that threshold could mean running the risk of falling behind on different bills, or having to let other financial goals fall by the wayside.

I also think this poster should talk to a qualified financial advisor about their situation. Buying a house is a big financial change. An advisor can help them navigate their new financial circumstances and help them stay on track with their savings goals despite the large expense they’re taking on. A professional can also help them invest efficiently so the money going into their 401(k) is able to grow nicely.