Should You Prioritize Paying Off Debt over Saving for Retirement?

The managing director of Speicher Financial Group, Jeffrey “Jeff” Speicher began his career as a financial advisor in 1998 with Paine Webber, a predecessor to UBS, in Denver, Colorado. Jeff Speicher later worked for Wells Fargo for over a decade before founding his own firm, where he offers financial advice to clients on matters such as retirement planning and debt repayment.

Should working adults pay off their debt ahead of retirement? The answer depends on an individual’s financial position. For example, if a person is paying off a mortgage at a low interest rate, they may want to pay off the debt in full, before retiring, by increasing their monthly contributions. However, if that same person opted to deposit those additional funds into a retirement account that has a higher interest rate, the potential long term growth of that account can outweigh the benefits of paying off that mortgage debt. This long term growth may even be higher if the individual’s employer offers a matching retirement account benefit.

Ultimately, it is important to remember that saving and paying down debt doesn’t need to be a zero-sum game: With thoughtful financial planning that’s tailored to an individual’s personal circumstances, it is possible to pay off debt while saving for retirement. 

What Is Portfolio Rebalancing?

For over 20 years, financial advisor Jeff Speicher has addressed his client’s financial needs using his experience in financial markets to deliver personalized investment services. In his current role, he guides Speicher Financial Group as the managing director and financial advisor. Jeff Speicher specializes in offering his clients sound portfolio management strategies.

Portfolio management strategies are used by professionals to achieve long-term financial objectives and provide risk tolerance. Rebalancing, a portfolio management strategy, involves buying and selling portions of a client’s portfolio in order to regain an asset class back to its initial state. Rebalancing becomes necessary in the event an investor’s strategy or risk tolerance level changes.

For instance, if a target asset allocation was 50 percent stocks and 50 percent bonds, rising prices of stocks can increase the portfolio’s stock weighting to 70 percent stocks and 30 percent bonds. In this case, an investor may decide to sell some stocks and invest in bonds to regain the initial asset allocation of 50/50.

Portfolio rebalancing aims to protect an investor from overexposure to undesirable risks. Measures are also put in place to ensure the risk level associated with an asset remains within an investor’s desired margin. Rebalancing gives investors an opportunity to sell assets at high prices and buy at low prices. While there’s no specific schedule for rebalancing, it is advisable to review allocations at least once per year.