Reply to Dialing back 401k until both kids are in PK3

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]How the Hell do you reduce your contributions by $50k over the next two years and only reduce the FV of your retirement accounts by $30k? You're being dishonest somewhere.[/quote]

Op has some  confounding elements she's looking to take $50,000 from family repaying that at $830 a month.  However in order to do so she needs to stop contributing to her 401(k) for a period of two years.  Thus the relevant calculation  in simple terms is  The value of the $20,000 she would have contributed over the period compounded.

Regardless OPs math is fucked. $20,000 put in an account today and allowed to accrue for 30 years at 6% is $114k. 
[/quote]
OP here. Please don't confuse bad math with dishonesty. You're right, and I did have an error in my future value equation - my interest rate and contributions were set to a biweekly rate/amount, but my number of periods was set to monthly. So the numbers are a bit more severe than what I originally thought.

What I'm looking at doing is [i]dialing back[/i] my contribution, not stopping it, while one kid is in daycare. If I do it as a 401k loan, I'm required to pay 4% interest, which I pay back to myself. I'd keep roughly the same out of pocket contributions to the 401k, but only a portion would be new and a portion would be loan payback. As a result of both of those things (interest payback + continued contributions), the numbers aren't quite as dire as if I pulled it out completely. I was also using an annual growth rate of 4% to be conservative - the effects are much larger at 6%.

What I think I will ultimately do is take the 50k as a 401k loan, dial back my new contributions for 2 years to meet my company match (which will require me increasing my overall out of pocket by about 200 bucks/month).

Here's what the numbers come out to at 4% and 6%
Age 42: 23k/24k difference
Age 62: 77k/93k difference
Age 72: 141k/170k difference

Those of course assume no withdrawals prior to 72, so the numbers aren't *exactly* right, but close.

Thanks for the tip-off to re-look at the math. The cost of borrowing that money is pretty significant. We have the option to do a VA cash-out refinance a few months after we close. That has a 3.3% fee associated with it, which will be about 20k added onto our mortgage balance. That's probably a much cheaper way to get the extra cash.

Here's what those numbers come out to at 4% and 6%
Age 42: 23k/24k difference
Age 62: 34k/41k difference
Age 72: 53k/65k difference

When I look at the numbers that way - it works out like

[/quote]

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