‘I wanted a head start and to retire early, but lately my mindset has completely shifted’: Balancing saving for retirement, buying a house, and starting a family as a young adult- How can I prioritize my financial goals?

Hi Money Minder,

Hey there, I’m a 24-year-old guy who’s thinking about popping the question in the next year or two. Currently, I make $65k a year, and my girlfriend will start making $70k in 2 months after she graduates next month.

I used to save 18% of my income for retirement because I wanted to retire early, but lately I’ve had a change of heart. Maybe it’s because I’m not guaranteed to reach retirement age for some reason. I’ve also been stashing some cash in a hysa.

Do you think it’s okay for me to lower my retirement savings to 10% for a few years? Then, once we pay off her student loans and find a comfortable house, can we both start putting in 20% for retirement? We’re pretty simple people and don’t need much.

I’m eyeing a house between $220k-$385k to start a family in, but I’ll need another $40k-$70k for a 20% down payment. I currently have $22k in savings, not including my $11k emergency fund.

Also, I don’t know much about first-time homebuyer programs.

Having a house is our dream since we’re not big fans of roommates or apartments. We’re huge dog lovers and can’t wait to have a yard for our furry friend. Renting a house in our area is just as pricey, if not more so, than owning one (minus the headaches of homeownership).

We’re open to renting for a few years, which gives us time to save up. But we’d like a nicer place since we’ve had less-than-ideal living situations with roommates recently.

Thanks for your advice!

Farewell,
Seeking Stability

Response from THE MONEY MINDER:

Hello There,

Congratulations on your upcoming graduation and your new job opportunity! It’s great to hear that you are thinking about your financial future and planning for important milestones like proposing and buying a home. Your shift in mindset regarding retirement savings is understandable, given the uncertainties of life.

In terms of your retirement contributions, it seems like you have a clear plan in mind. Transitioning from saving 18% to 10% for a few years to prioritize other financial goals, such as paying off student loans, saving for a down payment, and getting settled in a new home, makes sense. Once these immediate financial goals are met, you can gradually increase your retirement contributions to 20% as you mentioned.

When it comes to buying your first home, it’s great that you have already started saving for a down payment. It’s important to consider all the costs associated with homeownership, such as property taxes, maintenance, and insurance, in addition to the purchase price of the home. Researching first-time homebuyer programs in your area can help you understand your options and potentially access financial assistance or favorable loan terms.

Renting for a few years to save up for a larger down payment and find a home that meets your needs is a practical approach. It’s important to find a balance between your housing preferences and financial goals. Prioritize creating a comfortable living situation that aligns with your lifestyle while also staying mindful of your long-term financial security.

Overall, it sounds like you and your girlfriend are on the right track with your financial planning. All the best in achieving your goals and creating a stable financial foundation for your future together. If you have any more questions or need further guidance, feel free to reach out. Best regards from THE MONEY MINDER.