401(k) vs. Roth Funding for Home
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Retirement Planning TipsSmartAsset
•Business
Business & Economics
Ask An Advisor: I Want to Build a New House for $700k. Should I Use Roth Savings or Get a Mortgage?
78% Informative
As you approach retirement, the way you fund large expenses can have long-lasting implications for your financial security.
No single funding method is likely to meet all your needs and goals.
Using a lump sum from a 401(k) to pay for construction might seem like the simplest option, but it comes with several drawbacks.
Ultimately, retirement savings should be preserved to fund retirement itself.
Selling your current home and renting while you build your new home is a fourth option to consider.
Selling it now would free up equity and generate cash to fund a portion of the new build.
There's no one-size-fits-all answer, but retirement accounts are meant to fund retirement and should only be tapped in a true emergency.
Jeremy Suschak , CFP , is a SmartAsset financial planning columnist.
He answers reader questions on personal finance topics on AskAnAdvisor.com and your question may be answered in a future column.
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