My wife and I each save 15% in our 401(k)s. How should we balance that with other goals, like buying a house?

It's not often that we get emails from our readers worrying that they're saving too much for retirement. It's even rarer that we'd say that, yes, it could be time to cut back. But in this case, that's our advice.

In a perfect world, everyone would be maxing out their retirement savings and setting aside enough for short-term goals, like purchasing a home. In the real world, however, compromises must be made. Assuming that a 15% contribution isn't leaving a lot left over for savings elsewhere, it could be time for you to reallocate.

As a general guideline, young professionals in their 20s should save 10% of their gross income for retirement, advises Stewart Welch, a Birmingham, Ala.-based certified financial planner and author of "The Ten Minute Guide to Personal Finance for Newlyweds." But that doesn't mean it should all be held in a company's 401(k) plan. Instead, people should contribute just enough to qualify for the employer's match, and then consider other options, says Welch.

Assuming you and your spouse qualify, you should invest what's left of that 10% retirement allocation into a Roth IRA, advises Christine Benz, associate director of fund analysis with mutual fund ratings company Morningstar. Not only do IRA accounts generally offer more mutual funds to choose from than 401(k) plans, but qualified withdrawals taken from IRA accounts are also tax free. (Money withdrawn from a 401(k) is taxed as ordinary income, which in today's environment can run as high as 35%.) And perhaps more important, a Roth IRA offers more flexibility than a 401(k). While we don't recommend it, penalty-free withdrawals can be taken out for a number of reasons. In your case, note that up to $10,000 can be taken to cover costs associated with the purchase of a first home. (If the account is less than five years old you will have to pay taxes on the earnings; if it has been open longer than that, you won't even need to pay the taxes on the earnings withdrawn.) Also, original contributions can be withdrawn at any time, for any reason.

The one catch with a Roth IRA is eligibility. In 2005, the maximum contribution amount is $4,000 per person for singles with adjusted gross income (AGI) below $110,000 (subject to phase-out starting at $95,000) and for couples with AGI below $160,000 (subject to phase-out starting at $150,000). Keep in mind that if you still have money left over once you've maxed out a Roth, then by all means invest the rest back into in your 401(k). For more on the Roth IRA, click here.

Now let's talk about the 5% of gross income that can now be applied toward short-term goals. Before you start investing that income, be sure to pay off any outstanding consumer debt. Not only will this slash your interest payments, but it will make it easier for you to qualify for a mortgage. Lenders typically like to see mortgage debt make up 28% or less of a borrower's gross income, and total debt, including credit cards and auto loans, to be less than 40% of gross income. (For more tips for first-time home buyers, click here.)

Once these steps are taken, it's time to start saving in a taxable account. Couples who anticipate making a major purchase in three years or less should invest their money in something safe, such as an interest-bearing money market fund or certificate of deposit, says Welch. Some of the highest interest rates are offered by Internet banks, such as EmigrantDirect.com and ING Direct. For more on short-term savings, read our story.