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Anyone here NOT maxing out their 401Ks or IRAs

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    Anyone here NOT maxing out their 401Ks or IRAs

    Given our income (for where we live), it's hard to both max out our 401Ks and IRAs and still be able to continue saving a large amount for the down payment on a home. Quite frankly, we may need to scale back to not maxing out the 401K this year to really put that money in the down payment fund instead.

    But I feel really down about this decision. I guess my question really is a request for reassurance that it's OK to NOT max out one's retirement a/c and still be OK in our golden years (and not have my boy starve after our time). A home with a large backyard is becoming a critical need, esp as he ages and gets more and more active and a little harder to manage in our small condo.

    We will be buying in an area with a lower COL and maybe able to max back the retirement investments once we are in a house that works for our son. But that will mean giving up 2 years of investment growth... I don't know, I'm just really overwhelmed and my brain has shut down from my neurons burning out from just thinking and thinking and thinking about this.


    Lots of people don't max out their 401k. Studies have shown somewhere in the 8-12% range do so. Why? Lots of reasons but a biggie is that if your goal is saving 15% for retirement, the 401k limit this year is $19,500. That's 15% of $130,000. Most people don't make that much so they can save 15% but still not max the account. And, of course, most people aren't saving 15% anyway.

    You have to balance all of your priorities. If buying a house is at the top of your list right now, then trimming back on retirement for a bit makes perfect sense.

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.


      Scallywag, if I can at all, please please please feel completely reassured that you are absolutely making a good decision for yourself.

      Over the last year, my wife and I decided to stop maxing out my TSP (401k equivalent), even though it is easily and fully attainable for us. However, we are also planning to retire early, or at least want the flexibility to do so. That means we need to build up a bridge account for us to have enough to support ourselves before the retirement accounts can be cracked open. Maxing out the TSP and our Roth IRAs would mean putting about 20% of our income into retirement accounts. But we need some of that money outside of retirement, so we cut that down to only 15%. The rest is getting diverted into a taxable account.

      The bottom line is that you are making a realistic, smart, pragmatic decision that is 100% in line with your family's priorities and goals. I completely agree and commiserate with the grating feeling for an instinctual saver of not maxing out every tax advantaged opportunity available when you know that you can. I have and still do struggle with the same thing. But remember that you are doing what is in your family's best interest. And besides, reduced retirement savings for just two or three years will mean nothing 30-40 or more years from now. Sure, you will have lost a little bit of investment income. But your family will be in a better, happier, more appropriate home given your family's situation. Plus, a SFH with a nice yard will appreciate more than a tiny little condo anyway.

      Reduce your retirement savings. Save up for the house, buy it, and enjoy it. Your retirement account will be ready for you when you're ready for it.
      "Praestantia per minutus" ... "Acta non verba"


        What you're doing sounds like the right plan. Prioritizing family over retirement savings in the near-term makes perfect sense to me. As you note, its a short-term change, and once you're in the house, you'll reassess your savings rate. Family first.


          I don't max my 401K either, but still max Roth. In order to do so I'd have to contribute 22% of my gross, which recently I bumped contribution from 18 to 19%. So right now my priorities holding onto more cash for tuition out-of-pocket.

          As others have pointed out, you should not feel bad or obligated to max it out if you have financial goals or plans in mind. I don't think anyone would argue or criticize if your goal was saving for a bigger down payment on a home. I say keep doing what you're doing and have no regrets or overthink your plan.
          "I'd buy that for a dollar!"


            I'm currently not.
            I do save in a taxable account and in cash in addition to a 401K

            The flexibility of having my money readily available without penalty is appealing
            Especially if I want to retire early instead of being forced to wait until I'm 59 and a half



              We've never maxed out a 401K. We most likely never will.

              Two reasons:
              1 - Don't need to max out to reach our goals (& don't want to be too "retirement poor")
              2 - We don't need the tax break

              #2 is also important to work through. Taxes are complicated.
              (Probably most of our somewhat "retirement poor" is being extremely tax efficient.)

              Last edited by MonkeyMama; 03-09-2021, 05:05 AM.


                I started the year off contributing just 6% to the 401k. I think I have 2 more paychecks until I go back to 20% contributions.

                tempted to not increase it but I like the tax break. And you never know when your employment might end. Or have to take a pay cut. So I max it while I can for the last 5 years now I think.

                roth is maxed.


                  I am maxing out a Roth IRA and contributing the minimum amount to a 401k to receive the maximum employer match. This amounts to roughly 10% of income into designated retirement accounts not counting the employer match.

                  Honestly, it all depends on your goals. Saving for a house down payment, saving for a second property, purchasing land, investing within taxable brokerage accounts, etc. are all worthy strategies that are going to secure your financial future. There are many effective strategies you can take. It doesn't ALL have to be strictly done using designated retirement accounts.


                    You will be fine!! The fact that you were doing both already likely has put you in a good position.

                    I lowered my 401k contribution to my company match for about 6 months while we saved for our down payment and have no regrets.

                    I am maxing out 401k now but not contributing anything to IRA while we save for a second home purchase later this year.


                      Nope never made enough to max out a 401k, only started being able to contribute to a Roth IRA in the last 8 years, never had any extra money before.

                      That said when I first started work I put 6% in my 401k and upped it every year by 1% when I got a raise and now I'm up to 30% going into my Roth 401k at work, still no where near maxing it out. BUT, I will have more than enough in retirement income from it. Schwab has a great website that shows you how much in income your 401k will provide, we're good. Slow and steady wins the race.


                        I used to max my 401k from around 2007 to 2017. The past 3 years I havent gotten anywhere close to maxing 401k. I still max roth ira. I was fortunate enough to max my 401 when I first started working in my mid 20's.

                        Here's a breakdown of growth since 2018, this rollover account is from a previous employer where im no longer contributing. AA is 90/10

                        2018: -$15,334 (down year)
                        2019: +$91,459
                        2020: +$74,336

                        I only included those years since before that, I was maxing the accounts. Its great and all to be able to max a 401k, but at a certain point, your contributions play very little on the overall growth of the account. The tax benefit is still nice though.


                          I don't max out any retirement accounts because 1) contractually I can add more to my retirement accounts but there's a required amount and match that I get from my employment. 2) my financial planner indicated based on what I have and what will go in as I work, I'll be fine and that I can probably retire early.

                          I'm not a big spender and while we live in a expensive housing market (home paid) we keep our spending pretty conservative. My spouse and I live on one income.


                            So we've always maxed out but next year will be the first year 2022 because we won't have it as an option. That being said, I don't think scaling back is a bad idea. You still are saving bottom line. Whether it be for retirement or a home. You are saving so that's the more important variable i would think. That you are used to living on less. Monkeymama has a great point about not needing as much as people save potentially. You probably should figure out if you need to have so much saved. We probably don't if we were to work until 62 or 65. But giving it up at 55? I'd rather have more than less.
                            LivingAlmostLarge Blog


                              I 'm no longer employed .. but when I was .. I refuse to put all my eggs in the 401k basket.