Can I Fund Retirement with Less to Buy a House?
- Jonathan Harner, CFP®
- May 1
- 4 min read

This is a classic financial dilemma. Like so many things in life, there is not necessarily a right and wrong answer. The answer depends on the tradeoffs you are willing to make.
So, perhaps a better question is: how will you determine which financial tradeoffs you are willing to make?
The first place to start is understanding financial tradeoffs is to look at the numbers so you know what you are actually giving up/gaining.
What does financial independence mean to you?
The number I recommend starting with is how much you actually need for financial independence. This exercise alone is very valuable. Saving for retirement can often feel like you are throwing money into a black box hoping that you will wake up one day and there will magically be enough in the box to retire. How much would it be worth to you to have the black box opened so you know how much you actually need?
How much will your new house actually cost?
The next number I like to know is how much extra the new house will cost. Here are the numbers you will need: mortgage payment, taxes, insurance, maintenance estimate. I like using 1% of the home’s value as an estimated annual maintenance cost.
A key thing to keep in mind is your taxes and insurance costs won't go away when the mortgage is paid off.
Once you have these two numbers you are at the first decision point. If you are on track to fund retirement, and the extra monthly amount needed for your new home is well within your free cash flow margin, then it's a pretty easy decision. You should be able to afford the house.
However, if the new house is going to require you to reduce retirement savings and/or use up most or all of your free cash flow, then there are more things that need to be discussed and determined.Â
Other Considerations
Let's pretend the new house will require a reduction in retirement savings. The next question is: are you willing to work longer to buy a new house and fund your retirement? This is a question that requires self-reflection and thought. Also, in my experience the younger you are, the longer you are willing to work. The older you are the sooner you want to retire. So, if you are in your 30s, working until 70 may not sound bad. But when you are 60, 10 more years of work may sound like hell.
There is not a right answer, just tradeoffs.
The next question to consider is are you okay with the reduced financial margins? For many people, greater financial margin = less financial stress (put another way how far below your means are you living?). The inverse is also true. The closer you are to living paycheck to paycheck, the greater the financial stress. What if it means you need to work a bit longer or pick up an extra shift every week or month? Are you okay with that? Again, this requires self-reflection and thought.
There is not a right answer, just tradeoffs.
Hidden Costs and Risks
Some hidden costs that must be factored in include increased pressure to perform at work. Your financial margin may be reduced, so now you have to perform. Maybe it makes it harder to stand up for yourself or someone else because you are concerned about losing your job. And you really can't afford that.
Another hidden cost is lost flexibility. Maybe your cash flow was reduced enough, you can't eat out as much or take vacations and travel the way you were.
Values-Based Decision Making
At this point the decision may be very unclear. Perhaps there are multiple things that seem equally important. How can you ever make a decision?
Now it is time to look at our values. Determine what you actually value. No one can have everything. We all must choose. There are no right answers, only tradeoffs.

Let's look at an example to see how this could play out.
Let's pretend you have as a very important value "safety". Safety could play out in different ways. For some, when they think about safety, they envision having plenty of money in the bank account and lots of free cash flow. They want financial safety. For others they are concerned about their physical safety. Perhaps their home was broken into growing up. So, they feel unsafe unless they live in a gated community. The first person may be so stressed by the extra cost of a new house that it really doesn't make sense for them. The second person may be so stressed in their current house that it really DOES make sense for them.
Neither is right or wrong. They just have different values (actually they have the same value but financially it plays out in opposite ways).Â
There are fantastic resources you can find to help you clarify your values. Personally, I have found the value sort exercise to be incredibly helpful. If you can go through this exercise with a professional, it's worth your investment of time and money.
Making the Decision
There are no right answers, only tradeoffs. Ultimately, what you decide should be rooted in what you value. If you aren’t sure, I encourage you to pause your decision and gain clarity on your values first. Making decisions through the lens of what you value will lead to greater life satisfaction and less regret.
These are the sort of questions and conversations we regularly have with clients. If you would like to explore what working with a real financial planner is like, schedule a call here:
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