Don’t Let Debt Derail Your Retirement Savings

During the decades it takes to save for retirement, a lot can happen. It’s like a real-life game of Chutes and Ladders. When you’re in the early stages of your career, just coming up with the money to set aside might seem impossible. (For what it’s worth, even 1% of your salary will make a huge difference after decades of compounding.)

In your late 20s and 30s, you get some salary increases (win!), which you probably know you should use to beef up your savings. But you might want to save up to buy a home or be cash-strapped because you’re maintaining one. Then you might be starting a family. You could be setting aside money for college tuition and other family expenses, like vacations.

Life is like that. As a CFP and personal finance writer I know once said, “Things cost money!”

But one thing that really hamstrings retirement saving is non-mortgage debt. Credit card debt tops the list, followed by auto loans and student loans, according to the Federal Reserve Bank of New York.

When your monthly budget has to include debt repayment, it can take a real bite out of your ability to save for the future. 

Read our story on how many Americans struggle with debt, and some steps you can take to save for retirement even if you carry debt.

• If you’re wondering what to invest in, in retirement — individual stocks? ETFs? — this podcast has answers.
• Penalty-free withdrawals from your retirement account?
• Mandatory auto-enrollment in a 401(K)? (Don’t worry. You could still opt out.) Congress has been working on pulling together three bills into a single package known as Secure 2.0, which would make these things a reality.
• Millennials and Gen Z both say they’d like more than $1 million for retirement. No surprise, they’re also interested in having crypto as a 401(k) investment. Big surprise, nearly half are interested in an annuity option.