Should You Save For Retirement Before Paying Off Debts?

Saving part of your income for retirement is a habit everyone needs to nurture from a young age. Most people claim they can’t afford this, especially those with little income, but it is the surest way to secure your future.  

Here are several reasons why saving for retirement while paying off debt should be part of your financial plan. 

Having A Sustainable Savings Plan

Consider making a flexible debt payment plan to channel some money towards investments, which can compound over the years to help clear your long term debts. Some investments have annual returns, such as stock market dividends, which you can then use to help pay off your debts.  

Training Good Habits

Generally, the habit of investing prepares you for financial crises that might come up later in life when you’re not as capable of working as when you were younger. Saving for retirement as you pay your debts is a win-win situation since it becomes much easier to achieve financial freedom.   

Financial Responsibility

If your employer makes additional retirement contributions in the form of a match, you should not delay investing – at least the amount of the match. An employer match is essentially a 100% return on your money. 

Building Wealth

Saving early on is the easiest way to build wealth, which you can pass on to your future generations. Saving comes with investments, and over time, you will realize your money has given birth to even more money.  

Financial Backup

By funding a six-month emergency savings account, you can always have something to fall back on in case you lose your source of income. This should be motivation enough to start saving at an early age to avoid going deep into debt. 

Early Retirement

When you start saving for retirement early, your chances for early retirement is increased. Let’s say you start saving in your early 20s, so, in about 30 years, you can choose to retire if you want and live a financially stress-free life.  

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