Here is what I did:
- Starting from day 1 at my full time time, I was saving the minimum required to get full match in my 401k. So that was 7% with a 3.5% match. I didn’t contribute more than that or to any IRA accounts. I did put some money in my HSA, though.
- During the first 7 years of my 20’s I was aggressively paying down student loans with my excess income. Getting rid of the high interest debt was important to me, more than buying a house, car, etc.
- After the student loans were paid off, I simply took what I was paying on the loans and put that money into a savings account each paycheck
- Once we hit the down payment number we wanted (10%) we bought a house and now what we were saving for downpayment each paycheck is going into our 401k and IRA’s
So bottom line, always save the minimum for retirement. With the extra income left over, focus on your short term goals. For us, that meant buying a house. With a high savings rate, it only took us a year or so to save the entire down payment. After that, we can now focus on saving in our retirement accounts. For you, if you aren’t sure about buying a house, save cash as an emergency fund. Saving is saving. I wouldn’t feel bad about saving a nice bit of cash to give you the option of buying a home, even if you aren’t sure yet. IMO, go ahead and focus on building up a cash reserve for a couple years, and then focus on retirement saving.