In a nutshell? Probably not. Being in debt is tough enough without also worrying that it will affect your retirement years—or even keep you from retiring.
With debt, the biggest issue you face is the interest. With retirement, it's time. By balancing these two things, you can hit on a plan that will help you now and in the future.
How can you find that balance? Start by looking at your debts. Pay attention to what kind of debts they are and how high the interest rates are. (At this point, you might want to exclude your mortgage and student loans and focus on credit cards, car loans, and other personal loans.)
If you're suffocating under heavy interest, or the minimum payments suck up too much of your income, it's probably best to pay off at least part of the debt before you focus on saving for retirement.
Let's assume you've got a little breathing room in your monthly budget. In that case, there are two very good reasons to save for retirement no matter what:
- Employer matching. If your employer matches a certain percentage of your 401(k) contributions, it makes good sense to contribute enough to get the full match. After all, why pass up free money?
- Time is on your side. The sooner you start saving for retirement, the more your money can grow.
If you decide to save for retirement while paying off debts, here's one way you could do it:
- Do what you can to lower your interest rates, by refinancing or, in the case of credit cards, simply asking for a lower rate.
- Figure out how much money this frees up each month, and begin contributing that amount to your 401(k) or IRA.
- Do what you can to free up other small amounts of money, which you can use to beef up your savings, pay off the debt faster, or treat yourself for making great headway toward your long-term goals.