Retirement is so important, and as a 23-year old I know that time is on my side.

I am currently not contributing anything towards retirement right now. When I first started my full-time job, my mindset was that after I finish paying off my debt, I will contribute the maximum I can towards retirement. I have a 401(k) that my company each month pays 3% towards, regardless whether I contribute or not. Today the balance is up to $1,094, but it fluctuates according to the market. I have a 0%-interest on my debt for my parents and of course will continue to save for other goals.

But I thought I would pose the question to other PF bloggers. Do you recommend that I contribute money towards retirement now? Or should I continue to plow away another year and a half and contribute after I am debt-free? If you were (or are) in the same situation, how do you handle retirement and debt?

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  • Good question! I know too many people who have really heavily lost out on their pension schemes for me to have much faith but it is sensible to have some plan or another. Husband and I bought our home some years ago and that is currently our only investment. I have started to save and I’ve decided that that is enough for me for now. When I’ve got a significant enough sum behind me, I’ll look at it again! I would say that it is best to stick with your plan of paying your debt off first. Once you are free you can look at the situation again!

  • It depends.

    If, after you pay off debt, you will be able to come close to/exceed maximum limits for retirement accounts, I would save first. There’s only a certain amount you can put in per year, so you miss your opportunity if you wait to invest. If you have no hope of coming close, it’s probably OK to wait.

    You might be missing the market bottom, but I don’t really think that’s an issue and we shouldn’t be trying to time the market anyway.

  • I don’t have the option to save for retirement right now, because I have a job that offers no benefits-just a paycheck. However, if I had the option I would probably try to contribute just a little bit. Of course, it’s different for every person.

  • Contribute now! Even if it is just a little, my biggest regret is not contributing when I just got out of college. Even if you give 2%, 5% is going to make a big difference over 3%.

    Being 23 you are in the best possible situations. Check out this tool: and you can estimate how much your money will grow.

    Also check out this:
    $5,000 a year at 25 = 1.3 million
    $5,000 a year at 45 = $230,000

    So why not do better and start contributing at 23!

    I urge you, if you can afford to contribute a bit more to retirement. It really will pay off in the future. (sorry for the long response)

  • My thought is that since you have a zero percent interest loan from your parents as your only debt, you are seriously missing out on the opportunity to make money by investing now in your retirement account. I would at least try to match the 3% that your employer puts in. And check with your employer to see if they will deduct your contribution pre-tax. Most do, so you actually lower your taxable income and save for retirement at the same time, a win-win situation.

    Most plans would encourage you to be aggressive with your investments right now as you have many years in the work force to earn the money back that is lost in the stock market. If you are not comfortable with this, and many people aren’t, especially right now, then don’t do it. If you are concerned about losing your contribution to the stock market, designate that your contribution amount goes to “bond” type investments-the ones your plan denotes as being ” for conservative investors”.

    Hope this helps.

  • I would throw that raise into your retirement account.
    You won’t really miss the money, and if you continue to do that for your next few raises you’ll easily max out your retirement savings and it will be totally painless.