Though 🌼experts say a secure retirement should take precedence over home ownership, it’s possible to save for both at the same time. It just takes careful planning, prioritizing, and budgeting.

“A big🅺 mistake I see people mak🥃e is having an ‘all or nothing’ attitude with money. Either be completely debt-free or invest. Either save up to buy a home or invest. I say do both,” says , partner and financial advisor at Kristopher Curtis Financial in Nashville, Tennessee.

Saving for a home and your retirement at the same time is a balancing act, even with a budget. If you want to balance both, here’s how to work toward buying a home and saving enoug𓄧h for retirement.

1. Balance Your Budget

When you are trying to meet multiple, large 澳洲幸运5官方开奖结果体彩网:financial goals, the key is to make a budget that you can stick with. A realistic budget will allow you to track your 澳洲幸运5官方开奖结果体彩网:cash flow and helpꦦ you work toward gaining long-term financial stability.

The 澳洲幸运5官方开奖结果体彩网:50/30/20 budget rule can help you save for retirement while paying off your🧸 debts. The method works by dividing your after-tax pay into three bucket🦩s: needs (50%), wants (30%), and savings (20%).

• Needs (50%): Housing, transportation, groceries, utilities, minimum debt payments
• Wants (30%): Entertainment, eating out, travel
• Savings (20%): Debt repayments beyond the minimum, retirement funds, emergency fund

If you want to buy a home, reducing your debt is critical to getting a good mortgage rate. Try to keep your 澳洲幸运5官方开奖结果体彩网:debt-to-income ratio lower than 36% and improve your 澳洲幸运5官方开奖结果体彩网:credit score as you pay down your credit cards. Having a low debt-to-credit r𝄹atio is not only good for loans but also important as you head into retirement, because carrying debt into retirement may lower your quality of life.

If you have to use retirement funds and 澳洲幸运5官方开奖结果体彩网:Social Security benefits to pay down high-interest debts, it means less money for essentials and extras, like travel, that may be important to you. If your debt ꦫincreases over time, you risk running through your💧 retirement savings to keep up with payments.

Taking stock of your debts♛ before retirement and planning to pay them down will help protect your financial securit♔y.

2. Track Your Cash Flow

Buyin🅺g a home can have short- and longꦚ-term impacts on cash flow. 

If you use all of your savings for a down payment, you risk becoming 澳洲幸运5官方开奖结果体彩网:house poor.ജ You may find it difficult to keep up with other expenses. Lawn and yard care can become costly, and the cost of various projects c🌠an start to add up. If you need to replace your roof or have an unforeseen emergency, like a burst pipe, you may have to pull from savings to fix it. What's more, if you cannot maintain your home, it may lose some of its value over time due to disrepair.

This all changes once you’ve had a chance to build 澳洲幸运5官方开奖结果体彩网:equity in the property. With equity comes cash: a house becomes more liquid. To apply for a home equity loan or home equity line of cred𝕴it (HELOC), lenders will typically require you to have at least 20% equity in your home.

Owning a home comes with o𒁏ther benefits, too—and it can translate into retirement savings.

“Believe it or not, when buying a primary home, you are actually killing two birds with one stone: homeownership and retirement savings,” says , a private real estate investor and founder of Wiseman Advising LLC. “The largest asset and most expensive ♓purchase that most people will ever make in their lifetime will be 🐼their primary home. We can use our home as both a place and a family, but also as a significant driver in saving for retirement.”

And after decades of mortgage payments, you may have enough equity in your home to sell the property and move on. 澳洲幸运5官方开奖结果体彩网:Downsizing may provide an influx of cash to sustain you during retirement.

Still, it's important not to lose sight of retirement savings, even as a homeowner.

“Inadequate retirement savings can lead to a reduced standard of living and extended working years, while not owning a home means missing potential asset appreciation and tax benefits,” says , a cert🥂ified financial planner (CFP) and certified trust and fiduciary advisor (CTFA) for Cypress༺ Capital in Franklin, Tennessee.

Between the two goals, “priorit🦂izing retirement savings is usually advisable,” he says.

3. Consider All Your Financial Priorities

When contemplating how to save for a home and retirement, it’s a good idea to evaluate your personal goals and circumstances, like your age, current and potential future income, your partner’s contribution (if appli🐓cableꦬ), and your timelines for retirement and purchasing your first home.

For example, suppose you are planning to start a family. In that case, you will have to set aside money to 澳洲幸运5官方开奖结果体彩网:pay for related costs, like anything that's not covered by your insurance for the birth, adoption costs, new baby gear, and ♔ongoing expenses like child care, if needed.

Families with young children may want to add to a college fund, which will also take dollars out of your budget. If your children are older, you are part of the 澳洲幸运5官方开奖结果体彩网:sandwich generation, and may also be caring for aging parents.

Whatever your stage in life, your dollars will always have to stretch further if you𓃲 are prioritizing a home and retirement simultaneously. And your🦂 goalposts for each item will likely be very different at 25 than at 45. Financial security will become more important as you age; any amount you can put toward retirement is crucial.

“A 25-year-old can afford a more balanꦡced approach,” Bevins says. “Leveraging the long-term benefits of compounding interest for retirement while also saving for a ꦡhome down payment is possible, but this age allows for greater flexibility and risk-taking.”

That is less the case if you are 20 years older. “For a 45-year-old, the focus should be on boosting retirement savings due to the limited time remaining until retirement,” Bevins says. “While balancing homeownership goals is possible, retirement savings should take precedence to ensure financial security.”

4. Determine How Much to Save

One of the biggest financial hurdles you may face as a homebuyer is affording a down payment. The average down payment for first-time buyers is 8%, according to data from the National Association of Realtors (NAR).

If saving 8% or more feels too difficult, then government-insured mortgage programs like 澳洲幸运5官方开奖结果体彩网:Federal Housing⛄ Administration (FHA) loans only call for a 3.5% deposit, making them more accessible than conventional mortgages for first-time buyers. (Keep in mind that these loans—and conventional ones with down payments lower than 20%—require mortgage insurance.)

If you or your spouse is an Armed Services member or veteran, you may qualify for a mortgage l💛oan from the U.S. Department of Veterans Affairs (VA), which calls for zero down.

5. Diversify Your Assets

While home equity is an asset in retirement, it shouldn’t be your only one. Other options beyond Social Security include employer-sponsored retirement plans like 401(k)s and 澳洲幸运5官方开奖结果体彩网:individua⭕l retirement accou♏nts (IRAs).

Anything you can automate each month toward your retirement can help you stay on track. Maxing out your retirement contributions every year, opening a 澳洲幸运5官方开奖结果体彩网:spousal IRA (if it applies to you), taking advantage of 澳洲幸运5官方开奖结果体彩网:employer-matching, and investing in 澳洲幸运5官方开奖结果体彩网:simplified e🥀mployee pens🐟ion (SEP) IRAs and Solo 401(k) accounts as an 澳洲幸运5官方开奖结果体彩网:individual or small business owner a♔re all ways 🌼to set money aside for your retirement.

6. Establish Timelines

When you plan for long-term financial stability, it can help to establish a timelin𒐪e for your goals. Having a sense of when you hope to achieve certain financial priorities can help you see the big picture, plan your budget, and stay on track with your daily spending and savings.

For example, let’s say that you plan to buy a home. Setting a timeline can help determine h♔ow much you need to save each paycheck for your down payment. It will also factor into your choice of savings plan.

“If you plan on purchasing a home within three years, we typically suggest holding your down payment in cash in checking, regular savings, or high-yield savings accounts—or in near-cash accounts and investments like CDs or m💃oney market funds,” says , CFP, vice president and financial consultant at Fidelity. “This guarantees you’ll have access to the funds when you need them and protects them from the inevitable ups and downs of the market.”

Similarly, your retirement timeline will depend on how old you are and how long you want to wait to retire. According to the 澳洲幸运5官方开奖结果体彩网:Social Security Administration, the full retirement age for Gen X and millennials is 67. This is when you're eligible to receive your full Social Security retirement benefits. You can begin collecting benefits as early as age 62, but your benefits will be permanently lowered.

If you are saving for a home, you may need more time to save for retirement. Consider what's affordable now, and then increase your retirement contributions as you age.

7. Simplify Your Savings

Automating your savings can help you simplif☂y the process of achieving your goals.

If your employer offers a tax-advantaged retirement account like a 401(k) or 403(b), especiallyไ one with employer-matching opportღunities, you should probably sign up for it, most experts say.

“Missing out on an employer match to free up additional money for a down payment is generally not advisable, for example, since☂ you’d be leaving free money on the table,” Viktorin says.

Plus, aut♕omating those monthly contributions can keᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚep you from being tempted to skip a month.

8. Consider House Hacking

House hacking is one way to support ret꧟irement savings if you have a disposable income and don♚’t mind moving from home to home.

“House hacking is a phenomenal way to build real estate assets using lower residential financing for owner-occupied homes,” Wiseman says. “This is a strategy where a buyer purchases a home at an owner-occupied interest rate and down payment percentage, lives in it for 12 months, and then moves out and rents the unit. They continue this practice yearly until they’ve been able to amass a strong 澳洲幸运5官方开奖结果体彩网:portfolio. This is a greaಞt way to add units to your portfolio if it’s harder to oꦗbtain capital.”

Wiseman says this method is appealing because “owner-occupied residential purchases require anywhere from 3% to 10% down payments, while inꦕvestment property usually requires 15% to 25% down payments, on average.”

However, he says, “This allows for people to take on more leverage and use less cash,𓄧 which isn𒀰’t always a good thing.”

More Ways to Boost Savings

There are other ways to supplement savings and build assets for retirement. Consider passive income streams, such as renting a room in you🍸r home or your primary residence over weekends and holiday breaks via a home-sharing platform.

Other ways to supplement savings for a 澳洲幸运5官方开奖结果体彩网:down payment on a home could include renting a smaller and cheaper apartment for a period while you save, taking on a 澳洲幸运5官方开奖结果体彩网:side hustle, and/or asking your friends or family for a financial gift. For 2024, the Internal Revenue Service (IRS) allows gifts of up to $18,000 with no extra form needed.

Seeking Professional Advice

A fee-only 澳洲幸运5官方开奖结果体彩网:financial advisor or planner can help you create a personalized plan designed for your situation. Financial advisors and financial planners can help you create a budget, decide which financial vehicles to use for savings goals like 澳洲幸运5官方开奖结果体彩网:purchasing a home, and make a timeline for meeting them.

“No matter your life stage or current financial picture, meeting with a financial advisor is a great step towards achieving your money goals and improving your financial wellness,” Viktorin says. “There are a🏅lso a lot ജof digital tools available online to help you understand your expenses and savings goals if you don’t feel quite ready to meet with someone yet.”

Financial apps, like Simplifi by Quicken, or digital tools like AARP’s Moneyꦫ Map and others, can help you budget for your financial goals and may offer some general guidance on saving for priorities like owning a home.

In addition, most large banks, credit unions, and investment firms may𒉰 offer one-time free consultations, help you ❀create a free plan, or provide digital tools on their websites to help you get started.

The Bottom Line

Most experts 🧜agree that retirement savings should take precedence over other kinds of savings, but that doesn’t need to obstruct the path to homeownership.

澳洲幸运5官方开奖结果体彩网:Prioritize your savings goals by creating and adhering to a budget, automating retirement contributions, taking advantage of employer matching, cutting back on nonessentials, and using timelines to help you stay on task. T♕alk to a financial advisor or use online tools to help you calculate your retirement budget and decide how much house and mortgage you can afford to take on. A little planning now can help you minimize financial risk later.