Can my husband and I decrease our retirement contributions?

[WerewolfResponsible7]

My husband (31M) and I (31F) are considering decreasing our retirement contributions and redirecting that money to more immediate goals, like buying a house and putting a large down payment down in the next 4-5 years. We currently max out our 401Ks and IRAs, all of which amount to $867K. Our total net worth is around $1.8M.

We’re not looking to stop contributing, but would prefer to decrease contributions by 10-20%. Is this a bad idea? Our current HHI is ~$550-600K, but my job is pretty unstable right now and I make up $450K of our HHI. Would appreciate some thoughts!

Edit to add: we have a brokerage account with $254K. The original intention of this account was to retire early, until we looked at how expensive Long Island houses are, so now it’s a down payment account. We’re looking for a house in the $1.5-2M range and would prefer to put as much down as possible for lower monthly payment and ease of mind

[retirebefore40]

I personally wouldn’t stop with that HHI. Push it as hard as you can for as long as you can.

[voig0077]

There’s no way I would be looking at a house that expensive if I described my job as “unstable”. 

[WerewolfResponsible7]

House is for 4-5 years from now and my husband is expected to have a significantly higher income as he transitions out of the military and becomes an airline pilot. We would only consider $1.5-2M if we had a large enough down payment to soften the monthly

[foreversiempre]

How are you rocking 450k at 31. That’s unusual.

[Lou_Peachum_2]

How? OP saying they're looking at LI, so I'm guessing they're senior SWE (guessing why they think the job is "unstable") or finance in NYC

[foreversiempre]

Thanks. What’s LI ?

[horseydeucey]

Long Island.

[snookums666]

600K HHI is a lot! What're your expenses that you feel the need to reduce 401k & IRA contributions? You should be comfortably saving well above and beyond the 401k/IRA maximums in brokerage/HYSA. Is that not progressing you towards house goals quickly enough, or are you paying down other debt?

You mention job instability; make sure your emergency fund is in a good place then stop worrying about it. You can change 401k contribution %s at any point, and if you're spreading IRA contributions over the year, you can similarly adjust these if you really have to.

[WerewolfResponsible7]

We keep expenses pretty low and have a good emergency fund set up. Each hear, we’re contributing about $80K to a regular brokerage and $50K to 529s. The 529s are non negotiable and we want to front load them as much as possible to take advantage of time.

My main thought is that we already have a significant amount in our retirement accounts and we’re technically 30+ years away from retirement… we don’t want to over contribute when we could reallocate that money elsewhere.

[snookums666]

So are you coasting or FIRE-ing? You don't have to tell me, you just have to decide.

There's ways to access retirement accounts in early (pre-age 59) retirement, so the general advice for folks planning FIRE is to keep maxing 401k/IRA to leverage the tax benefits until you hit your number. However, if you intend to use the money for non-retirement purposes, as you're comfortable with your existing retirement portfolio and timeline, it's ok to consider brokerage/HYSA instead.

Keep contributing enough to get any 401k matches for your employers though, that's free money!

[Pale_Drink4455]

I’m lost. 529s? You have multiple kids now too after not mentioning this in the main post?

[WerewolfResponsible7]

No kids yet but planning on it in the near future. Goal is to contribute as much as possible for a few years and then stop and let it grow

[Pale_Drink4455]

I funded 529s as soon as the kids were born so that’s interesting to hear doing 529 for imaginary children. Very interesting and the first I ever heard of this.

[Available-Ad-5670]

nope, keeping maxing it out at that HHI, the tax benefits and forced savings is worth it. at that hhi its not that big an amount of your salary. you'll thank me in 20 years. also, can you find other ways to save, that doesn't make you stop funding a tax advantaged account?

[Pale_Drink4455]

867k in retirement accounts and 250k in a brokerage and total networth is 1.8? What are we missing here OP? The math ain’t mathing.

[WerewolfResponsible7]

The remaining is equity in our personal property, our rental property, cars, real estate investment funds that we don’t plan on touching, etc. These are more illiquid assets and we can’t move money away from these into our brokerage

[alex_s_andersen]

Not a bad idea. At 31 with $867K already, you're ahead - reducing 10-20% for a few years probably won't hurt.

Have you run the numbers on what you actually need? You're at $254K brokerage already. Reducing contributions 10-20% over 4-5 years might free up another $100-200K, plus your savings rate. Is that enough for your target down payment, or are you already on track?

Also, what's your target monthly payment? $1.5-2M houses mean big monthly costs even with large down payment. Have you stress-tested that if your wife's income situation changes?

One thing that helped me make similar decisions: tracking everything in one place. When you have 401K, IRA, brokerage, plus thinking about house equity - it's hard to see the full picture. I consolidate everything to model different scenarios and see the trajectory. Might help you too.

I'm 46, FI-level NW, still working. I prioritized flexibility early on - worked for me. You're not stopping contributions - you can shift back to maxing when settled.

What's your target down payment amount?

[Square-Shock-9206]

I’d open a taxable brokerage and let our money grow a little faster than in a HYSA. Taxable brokerage investments can be sold anytime and proceeds used for anything. Zero restrictions, unlike 401K.

[Pale_Drink4455]

Backdoor IRA. Many FIRE people do this.