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Updated almost 3 years ago on . Most recent reply

User Stats

24
Posts
9
Votes
Laleh Omaraie
  • Investor
  • Fairfax, VA
9
Votes |
24
Posts

Contribute to 457b (Employer Match) or Save for Downpayment?

Laleh Omaraie
  • Investor
  • Fairfax, VA
Posted

I'm a teacher. Every month some of my paycheck goes towards mandatory retirement contributions. I can't opt out of contributing entirely, but I currently contribute to an optional hybrid 457b defined contribution plan. I contribute 4% (the max) and my employer matches at 2.5%. (It's not 1:1 - if I contributed only 2.5%, my employer would contribute 1.75%.) My understanding is that I cannot take out loans against my retirement funds nor can I withdraw from my 457 unless I stop working for this employer. My overall financial goal is to hit Coast FI in the next 10 (preferably 5) years and my main vehicle for that is real estate - hopefully STRs.

 In my mind, it seems like contributing my 4% + the 2.5% cash match is better than hanging onto the cash and saving it for a down payment because the actual cash amount is so low (~$2200 from me and ~$1400 from my employer) that it seems like it wouldn't make a huge difference to a real estate deal and it allows me to be diversified. Con is that it's cash gone up front that can now only be touched under a limited set of circumstances.

Am I right in thinking I should keep contributing this 4%, or should I start getting my $220/paycheck back and start socking it away for a deal?

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