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<p><strong>KEY POINTS</strong></p>
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<li>Although there are benefits to buying a home, it's more important to make sure you're saving your money for retirement.</li>
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<li>You can build a lot of wealth by investing your money over a long period of time, which can make up for not being able to build equity in a home.</li>
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<p>Saving up to buy a home and retire comfortably would perhaps be easier to do if we all earned six-figure incomes or had ways to magically minimize our ongoing expenses. But alas, that isn't the case. And so you may find yourself torn between your desire to own a home and your desire to set yourself up for a financially secure retirement.</p>
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<p>In many cases, it <em>is</em> possible to save for retirement and a home down payment at the same time. But what if money is so tight that you're forced to choose?</p>
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<p>In that case, your best bet is to focus on funding an IRA or 401(k), and then work on saving for a home once your financial situation changes. Here's why.</p>
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<h2 class="wp-block-heading" id="you-can't-afford-to-not-have-retirement-savings">You can't afford to not have retirement savings</h2>
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<p>You need a place to live -- there's no question about that. But your home does not have to be one you own.</p>
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<p>On the other hand, you absolutely need savings to pay your bills in retirement. Social Security might pay you a decent-sized monthly benefit in retirement, but in many cases, it won't be enough to cover your expenses in full. So you'll need to prioritize your IRA or 401(k), or whatever account you're saving in, to ensure you don't wind up cash-strapped as a retiree.</p>
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<h2 class="wp-block-heading" id="you-might-build-more-wealth-by-investing-anyway">You might build more wealth by investing anyway</h2>
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<p>One financial benefit of owning a home is getting to build home equity in a place of your own. If your home gains enough value, you might then be able to sell it at a nice profit. But if you invest your money for many years, you might set yourself up for an even bigger profit.</p>
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<p>Real Estate Witch says that U.S. home prices appreciate 2% to 3% in value per year, on average. But the stock market has delivered an average return of 10% a year before inflation over the past five decades if we go by the performance of the S&amp;P 500 index.</p>
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<p>So, let's say you buy a home for $300,000 and hold it for 30 years. If it appreciates at a rate of 3% a year, it will be worth around $728,000 when you go to sell it. So you're looking at what could be a $428,000 profit.</p>
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<p>On the other hand, let's imagine that instead of saving your money to buy that $300,000 home and keep up with its mortgage loan, you instead put $500 a month into an IRA over a 30-year period. If your investments deliver an average annual 10% return, you'll be looking at a balance of about $987,000. When we subtract the $180,000 in contributions made over 30 years ($500 a month x 360 months), that's a gain of $807,000, which is almost twice the profit you'd be looking at on a home in the aforementioned example.</p>
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<p>In an ideal world, you'd be able to sock money away for a home purchase while also consistently funding a retirement plan. But if you have to choose, opt for the latter.</p>
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<p>You don't want to risk struggling financially for many years because you used all of your money to buy a home. And remember, you could always prioritize your nest egg but work on buying a home a bit later in life as financial circumstances allow.</p>
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<p></p>
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<p>To read the full article, <a href="https://www.fool.com/the-ascent/buying-stocks/articles/stuck-between-saving-for-a-house-or-retirement-this-is-what-you-should-do/">click here.</a></p>
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