March 17, 2017 at 10:17 am #22538CatherineGuest
Hi TSP Paul, first thank you so much for what you do. I am 35 and have close to 90K saved in my TSP. I make just a little less than that. I contribute 8% of my pay to TSP and with the 4% matching, that comes out to 12% being contributed towards my retirement. I’m single and am trying to save to buy my first home. I have no debt. As you know, this city is expensive. Should I continue to contribute 8% to retirement or should I lessen that percentage and direct that money towards saving for a home? I don’t need a defined answer – but any guidance would be appreciated.March 20, 2017 at 1:32 am #22561TS PaulKeymaster
It has been a long time since I was in your shoes. In my case, I wasn’t yet maxing out my TSP but I was getting pretty close. When I started getting serious about buying a house I was able to save the minimum I needed for my downpayment without cutting my TSP contributions, but it definitely added a couple of years to my getting to the max.
In general, because the expected return on investments in the stock market are so much higher than on a home (which is just 1/2% more than inflation per year on average in the US), from a financial standpoint you should put off buying the house and get your money to work compounding in the market. But it’s not just a financial decision – owning a home is very important to a lot of people, so I think it if fine to make that a priority. Just don’t go overboard and saddle yourself with such a large mortgage that you aren’t able to return to prioritizing retirement contributions in pretty short order.
The TSP Allocation Guide www.TSPallocation.com
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