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.