Background: Married (him late 40s & her late 30s); two young kids and done; VHCOL area; own one vehicle outright; rent home; no debt/no loans of any kind.
Caveat: Our life/economic situation changed within the last couple years for the better. Started saving for retirement in the past ~2 years; recently have seen increases to our incomes and feel like we’re finally making progress on our financial goals (we know we’re late to the game and have lots of catching up to do).
Current combined income: $182K/year
Savings: $140K saved in high interest savings account
Debt: ZERO debt
Retirement: Combined current value total of $101,000
Him: $22K in Traditional 401K and $11K in Roth IRA
Her: $17K in 457 Plan; $11K in Roth IRA; $40K in contributions to work pension plan
Spending: Don't track in detail but believe we're spending around $5k per month. We're auto investing $55K/year in tax-advantaged accounts and have about $3K extra each month that goes into savings.
Long Term Goals in priority order: 1. Retire in 18 to 20 years. 2. Own a home. 3. Have some $ to help kids with college expenses.
Question:
We would love to buy a house in the next year or two if A) we’re able to maintain our jobs and B) the local housing market cools down. We’d probably only buy if we could get something for ~$500K (in our VHCOL area, the “rent vs buy” calculator says this would be better than renting in the long term). We currently have $140K in savings (so if we do buy a house in the next few years, at least $100K of our savings would go to the down payment, and the rest would be our EF).
Given our personal economic situation & goals, and the current world situation, should we:
1. Keep piling money into our savings account? This is what we’re currently doing because it seems like the “safest” decision given the uncertainty in the world. Although I'm not sure this is really necessary. We have the potential down payment if we end up buying a house and a decent amount left over for an EF, so I'm not sure why we'd keep doing this. But again, the idea of having lots in savings/liquid feels really reassuring at this time.
2. Stop putting more money into our savings and instead take advantage of the market being on “sale” and increase our investments. We currently max out all tax-advantaged retirement accounts (minus husband's crappy 401K, where he’s contributing only around $15K instead of the full $19,500). So we could start maxing out his 401K and put additional savings into a taxable brokerage account and/or 529 plans for the kids.
3. Something else we’re not thinking of? We're very new to investing, the FIRE movement, etc. and the current world situation has us really questioning what we should do with our money (grow a huge ass emergency fund to be safe, or invest more because the market is on sale, or save for a house because the housing market will possibly cool; etc.).