Budgeting Advice

Should You Stop Saving for Retirement to Get Out of Debt?

Life is tough enough without having to worry about how you’re going to get by when you get old. The average American saves less for retirement than he or she did 25 years ago. The average American saved 3.6 percent of his or her income in 1992. In 2012, the average savings rate had dropped to 1.7 percent. What’s worse, many of us aren’t even contributing to a retirement plan! According to a 2012 Merrill Lynch survey, only 37 percent of Americans have a 401(k), 403(b), or other types of retirement plan. This shows how important it is for people to save their money early and have the tools provided for them to be able to save. There are many ways that people can save for retirement nowadays, whether it be through their workplace pensions to tapping into investment opportunities, this video can explain further, so that they have the support needed for later on in life.

When it comes to retirement, everyone has a different goal. While some might think about opting for assisted living at The Chelsea at Sparta (chelseaseniorliving.com/locations/new-jersey/sparta/) and its likes, others may simply want to make lots of money for their kids. Yet others might desire to escape from the vicious cycle of their 9 to 5 job in order to make their life more enjoyable and wholesome. Some might even have dreams of spending their retirement years on a remote island such as Malta! But regardless of your goals, it’s important to make sure you’re saving enough to take care of yourself after you stop working.

The average person has approximately $6,000 in credit card debt, and the average credit card debt load is $15,000. On average, the benefits of paying off that credit card debt are about $2,000 per year. If you are unwilling to sacrifice your retirement savings or lifestyle, you should do what you feel is necessary to get out of the credit card debt.

For most people, retirement is a long way off, so it’s easy to have a short-sighted view of the future. But the truth is, retirement is a daunting prospect, and a big part of its difficulty is knowing what to do with all of your money. If you’re thinking of retiring early, you should start saving, but you shouldn’t stop saving just because you have a few debts. You might have to rein in your spending for a few years, but if you save your money properly and put it away for a rainy day, you’ll have a much easier time of it when it comes time to retire. Also, you can explore the alternatives like retirement homes and elders’ homes that might provide facilities including healthcare plans, medication management, personal hygiene, transportation, hospitalization support, and meals. These services could be researched online. An example of one such service provider can be West PACE, located in California.

If you haven’t saved for retirement yet, it can be tempting to put the money you’ve set aside for retirement toward the monthly bills that are coming due now. After all, you’ll be able to buy that new car, eat out more often, or take that dream vacation once you’ve retired. However, you might not have enough money to cover the retirement essentials you’ll need when you stop working. So, you have to ask, should you stop saving for retirement to get out of debt?

Should you stop saving for retirement to get out of debt? It’s a common question asked by those facing financial troubles. But the answer isn’t as simple as it might first seem. First, you’ll need to know what “retirement” means to you. Does it mean an end to your current career or something more along the lines of maintaining a lifestyle you’ve grown accustomed to? If you’re trying to get out of debt, does “retirement” mean you should stop saving money altogether?

The question of whether it’s better to be in debt while you’re still young, or to build up your nest egg before retiring, is likely to be on the minds of most people. The decision depends on your specific situation, financial priorities, and how long you plan on staying in the workforce. A lot of people will tell you that it’s better to get your feet wet in the workforce before saving for retirement, even though the latter is more beneficial later on. That, however, is not the end of the story.

The common advice is to delay taking on debt as much as possible before you retire. It’s like telling kids, “Don’t go into debt before you’re rich.” While this message is generally well-intended, the problem is that the vast majority of people don’t end up rich; they end up broke. So, should you eliminate debt before you retire? We think the answer is usually, in most situations, yes-especially if you’re like most people and you’re starting your first retirement account with nothing to show for it. Trying to save for retirement while still paying off large amounts of debt can be very difficult and lead to very little retirement savings.

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