How to balance Retirement Investing vs Saving for Real Estate

Question

Hey everyone!

I'm 22 (just getting started with my investing journey) and I'm trying to figure out the most optimized way to allocate my funds, but I'm having a hard time balancing retirement investing with saving for real estate. I'd love to get your 2 cents.

for context:

income: $130k gross annually

capital: $30k+ saved

current plan:

1. HYS

a. Set aside 10k for EF

b Another 10k earmarked specifically for REI capital

2. Contribute 5% to my TSP

3. max out roth ira in VTSAX

4. Circle back and increased contributions to TSP toward maxing out

Based on that and where I am in my investing journey, should I prioritize building retirement accounts early or focus more aggressively on saving cash to get into real estate within the next 3-4 months?

I'm specifically looking at San Antonio, and wondering if having around 20K set aside is realistic to get started in today's market. I know it ultimatlely depends on the deals I find, but I want to get a sense from others if that number is realistic and workable. I'm particularly interested in starting with a house hack as my first deal.

Any guidance from people who ran into a similar situation at the same time (especially in their early 20s) would be super helpful.

Thanks BP community!

Tajana Reagan · Answer

Just to play devil’s advocate: be careful about becoming “retirement rich but cash poor.” It’s easy to over-prioritize retirement accounts early on and end up with limited liquidity when real estate opportunities arise.

A few quick thoughts:

• Your emergency fund should cover 3–6 months of expenses, not income—6 months is safer in today’s economy.

• If you’re serious about house hacking in the next few months, it may make sense to hold off maxing your Roth IRA until after you close. You can still contribute before tax time.

• Of course remember to plan for reserves and repairs - which is separate from emergency savings.

Focus on liquidity now; you can always ramp up retirement savings after securing that first property.

Ricardo R. · Answer

Hey, congrats on getting after it at 22—that’s a huge head start most people wish they had!

I’ve been in a similar spot (juggling retirement vs. real estate savings) and here’s a simple framework that helped me and others in your shoes:

1. Cover the basics first.

• The $10K emergency fund in a High-Yield Savings account? 100% smart. Life happens, and this keeps you from tapping into credit cards or selling assets.

The $10K emergency fund in a High-Yield Savings account? 100% smart. Life happens, and this keeps you from tapping into credit cards or selling assets.

2. Take the free money from your job.

• If your TSP match is 5%, keep doing that. A dollar-for-dollar match is a guaranteed 100% return you can’t get anywhere else.

If your TSP match is 5%, keep doing that. A dollar-for-dollar match is a guaranteed 100% return you can’t get anywhere else.

3. Roth IRA is solid—but optional if real estate is your main goal.

• Maxing out a Roth IRA in VTSAX is great long-term, but if real estate in the next 3–4 months is your priority, you could do the minimum this year and go heavier later. Roth contributions can be pulled back out (not gains), so it’s flexible if needed—but I wouldn’t recommend relying on that unless it’s a backup plan.

Maxing out a Roth IRA in VTSAX is great long-term, but if real estate in the next 3–4 months is your priority, you could do the minimum this year and go heavier later. Roth contributions can be pulled back out (not gains), so it’s flexible if needed—but I wouldn’t recommend relying on that unless it’s a backup plan.

4. Run the real estate math early.

• In San Antonio, $20K down could get you in the game—if you house hack. With FHA (3.5% down) or even 5% conventional, you might buy in the $200–250K range. Factor in closing costs, inspection fees, reserves, and small repairs—you want at least a few thousand left over after closing so you’re not stretched too thin.

In San Antonio, $20K down could get you in the game—if you house hack. With FHA (3.5% down) or even 5% conventional, you might buy in the $200–250K range. Factor in closing costs, inspection fees, reserves, and small repairs—you want at least a few thousand left over after closing so you’re not stretched too thin.

5. Timeline tip:

• If you want real estate in 3–4 months, start talking to a lender now. They’ll help you figure out exactly what you need to close so you know if $20K is realistic.

If you want real estate in 3–4 months, start talking to a lender now. They’ll help you figure out exactly what you need to close so you know if $20K is realistic.

Bottom line:

• Keep the emergency fund intact.
• Get the free match from TSP.
• Decide if the Roth IRA fits or if you want to pause it this year.
• Talk to a lender so you can move fast when the right house hack deal pops up.

Keep the emergency fund intact.

Get the free match from TSP.

Decide if the Roth IRA fits or if you want to pause it this year.

Talk to a lender so you can move fast when the right house hack deal pops up.

That way, you’re investing in both your future and your first property without feeling like you’re missing out on either one. I'll send you a DM

Julius Vincent · Answer

Hey @Verril Martinez - At 22 with $130K income, you’re in a great position. Grant Cardone says skip 401ks since withdrawals are taxed at ordinary rates, but the reality is they’re still powerful compounding vehicles if you start young. Your plan looks solid. Just make sure you’ve got enough liquidity for the house hack. With $20K saved, FHA or low-down conventional loans in San Antonio can get you in the game, but keep reserves on top of that. You don’t have to choose between retirement and real estate...do both, just balance liquidity with long-term tax efficiency.

Basit Siddiqi · Answer

I recently created an article on this topic recently.Investing in real estate instead of a retirement account(in my opinion) accomplishes what you are trying to do and it is more flexible.Cash flow is shielded by depreciation. Appreciation is not-taxable.Therefore, it almost acts as a retirement account plan.The benefits is that you have access to rental income before you turn 59.5. Furthermore, if the property appreciates significantly, you can do a cash-out refinance.Other benefits areNot subject to RMDIf you pass away, beneficiaries will get a step up in basisBest of luck to you with the decision you make.

Aaron Zimmerman · Answer

Here's what I would do after you have an emergency :

1. Max out 401(k) up until the employer match. It's free money

2. Put monies into an HSA

3. save everything else for real estate.

4. Any excess, put in a Roth or through your 401k

Aaron Zimmerman · Answer

@Ricardo R. I agree with this approach completely. I think Roth IRA would be after real estate assuming the opportunities are there to invest.

I'd encourage any investor to have some reserves for their property (5-15k per property for 2-4 units)

Jules Aton · Answer

My thoughts are definitely get max match from TSP that is one of, if not, the best retirement accounts available and max Roth IRA every year which is a no brainer in my opinion. I really like VTSAX it is truly passive income and has historically performed extremely well especially in recent years. Having capital available for purchases and expenses is important but I don’t like chunks of cash sitting around not earning much. With a relatively secure job and decent credit card limit I would consider emergency fund of 3 mos expenses plus $5,000 if only one property in HYSA or money market.

Rick Pozos · Answer

Hey @Verril Martinez   You should be doing all of the above, BUT it is all for retirement. It is all to pass down to your future children so that they can become the next Medici family.

Seriously, It is all to get you to the point of not having to work for the Man. Start your own part time business, real estate. Get set up to take advantage of all the many, many tax advantages of owning a c-corp or s-corp or even an LLC. Grow your business so that you are making enough money and have enough assets to NOT have to work for someone else.

How to balance Retirement Investing vs Saving for Real Estate

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