Core Insights - The article discusses the financial implications of pausing 401(k) contributions to afford a home, particularly for high-income earners like Weldon, who earns $330,000 annually and currently maxes out his contributions at $23,000 [2][4]. Group 1: Financial Impact of Pausing Contributions - If Weldon does not contribute the maximum $23,000 over 10 years at an 8% growth, he will miss out on $361,000 in his 401(k) [4]. - The potential growth of $361,000 could multiply to $2,073,400 in 30 years, emphasizing the long-term cost of pausing contributions [5]. - Pausing contributions could free up $23,000 a year for mortgage payments, which is significant in a high-cost market where mortgage payments could reach $3,500 a month [2][3]. Group 2: Considerations for High Earners - For high earners like Weldon, pausing retirement contributions may not be as detrimental due to substantial employer contributions, which could amount to $50,000 to $55,000 next year even if personal contributions are halted [4][6]. - The article suggests that if the only way to afford a home is to stop saving for retirement, it may indicate that the home is unaffordable [12]. Group 3: Recommendations for Decision-Making - Individuals should consider how long the pause will last; a short pause of six to 18 months may be manageable, but longer delays could hinder retirement savings [8]. - Evaluating personal savings and emergency funds is crucial; if there are sufficient funds outside of retirement accounts, a temporary pause might be justified [10]. - The article advises that if affording the mortgage requires skipping retirement contributions for years, it may be better to reconsider the home purchase [11].
I’m 30 and itching to buy a house but it’s just out of reach — can I pause my 401(k) contributions to afford it sooner?
Yahoo Finance·2025-09-29 16:00