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A recent survey revealed 77 percent of millennials consider their first step in preparing for retirement is paying down debt, but this can actually put you way behind the eight ball in terms of financial preparation for your golden years. So what’s the solution? Check out the following steps that outline how you can simultaneously pay off debt and save for retirement:

  1. Tackle high interest debt first

Interest rate is a huge factor when deciding which debts to pay off first. If you have credit card debt and your interest rate is between 15 to 25 percent, then you will most likely pay far more in interest on those debts than you will earn on retirement savings. For that reason, make it a priority to tackle these debts first. Creating a monthly budget and sticking to it is one of the key ways to erase high interest debt. Read this previous blog for information. Another idea is to transfer high interest debt to a card that charges no interest for an introductory period of time, which will provide a grace period to get rid of your debt without racking up any additional interest charges. Once you pay off your high interest debt, you’ll not only build up your credit score, but you can now target that amount toward your retirement savings.

  1. If you’re young, invest aggressively

If you’re in your 20s to early 30s, retirement is still decades away, and you can afford to take the risk of investing aggressively. You may take some hits with the market’s twists and turns, but you’ll achieve greater savings in the end than had you followed a more conservative route. Talk with a financial professional about setting up an investing portfolio that leans heavily on stocks, which will have a long period of time to grow. Make sure you also have an adequate emergency fund in place to help you weather rocky times you may encounter.

  1. Manage vehicle debt

Even though car loans don’t typically have high interest rates, they can still hinder your retirement savings due to the chunk of money you contribute each month toward payments. If you currently have a car loan, concentrate on paying it off, and after doing so, keep that car for as long as possible without a payment so you can invest your savings. For your next car purchase, consider saving up and paying cash, or striving for lower car payments by buying a less expensive vehicle, making a larger down payment, or trying to finding the lowest interest rate loans.

  1. Regardless of debt, take advantage of 401(k) match

If your company offers a 401(k) plan, find out if it also has a matching program and the minimum percentage of your salary you would need to contribute in order to receive that match. Even if you’re still in debt, a company 401(k) match is essentially free money that will begin accumulating interest on your behalf as soon as it is deposited in a 401(k). Since value of that money will continue to grow annually from now until retirement, it may be worth the sacrifice of being in debt just a little longer.

The bottom line: While it’s tempting to erase all debt before concentrating on retirement savings, there are ways that you can do both, thus creating a better financial picture for your future. Following the above principles will help you accomplish that goal.

Ron L. Brown, CFP®

Author Ron L. Brown, CFP®

Ron is a CERTIFIED FINANCIAL PLANNER™ and president of R.L. Brown Wealth Management. He specializes in retirement, estate, and business planning for professionals and entrepreneurs. Ron assists his clients with creating a financial plan to ensure they are able to live their ideal lifestyle during retirement and leave a strong legacy for their family. Ron has been featured in The Wall Street Journal, US News, Yahoo Finance, Investopedia, and numerous other high profile financial publications.

More posts by Ron L. Brown, CFP®

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