Financial advisers often say that one should save up for their retirement as soon as they land their first job. However, some people say that they are having a hard time following this because they are still paying off their student loans and mortgages. How can you save up for your retirement while paying off your mortgage and other loans?
Mortgage payments and student loans can take away a huge portion of your paycheck. It is pretty understandable why some people are struggling with saving for their retirement at an early age. However, Realtor.com notes that there are still ways for you to save up for your retirement even while you are paying for these loans.
While your home can be one of the biggest expenses you will ever make in your life, the publication notes that you can take a 30-year mortgage instead of paying it all off in a short time. This way, you can put more money into your 401(k) than put all of your savings into your mortgage payments.
Some people may also be tempted to use their 401(k) as a source of down payment. As previously reported here on Realty Today, it is not advisable to use the 401(k) savings for any purpose other than retirement.
Using the 401(k) savings can only lead to more financial stress in the long run. It can also cost you 10 percent excise tax if you withdraw the money before the age of 59 1/2.
You can also save up for your retirement by selling your current home and downsizing before retirement. This way, you can pay off the new home in cash and still have some money available to live a stress-free life in retirement. You will also save yourself from unnecessary home maintenance costs of owning a larger home when you downsize to a smaller one.
