Why save for retirement while you clear your debt?

Reader Earin (obviously from Europe, as they wrote in using the € symbol ;)), asked why someone would save for retirement if they were clearing their debt.

My question is, wouldn’t it be wiser to not save for retirement as long as one has debt and use that money to repay the debt faster.

Then after the debt has been paid one can save more for retirement.

Doing the math is quite complicated as it’s hard to predict what will be in 20,30,40 years.

You might argue that by saving soon for retirement one gets alot more befenits because of the interests accumulating. But at the same time the interest on the debt continue aswell..

The added bonus of paying down the debt with every € available is having the good feeling of being debtfree earlier 🙂

An excellent question and point! Here’s why we do it:


In North America, the social security/assistance/government plans are pretty pathetic, unlike the plans I hear of in France (for instance).

Did you know that France’s retirement age is 62!? They just recently raised it and everyone is annoyed.

These North American government retirement plans are low, and not enough to cover basic living expenses when you retire, especially if you consider how long some people have been living after retirement, that their mortgages may not be cleared and/or they might be in an expensive city.

I think my parents’ retirement fund from the government is $300 a month, or something paltry like that. Luckily, their employer supplements.

As a result, we have to save through employers and on the side to make sure we have enough to pay for our basic needs/necessities.

Actually, I wouldn’t be surprised if I near retirement age and the government tells me:

Hey, we ran out of money and have nothing left to give you, even though you contributed throughout your working life, because your parents/grandparents lived much longer than we anticipated.

Oops! Our bad! Sorry, but you won’t be getting anything.

I am actually surprised it hasn’t happened yet. 😛


If you are young, you have time to save for retirement, so you can put more of an emphasis towards clearing your debt.

If you are older, you may not have as much time, and you are fighting the battle on both sides:

  1. sliding closer to retirement age
  2. trying to whack your debt load down before you get to retirement, so you can start saving like a rock star


Like with fabulous employer contribution match plans!

If you put in $1, they put in $1 too, up to a certain amount.

If you put that same $1 towards debt (with an interest rate of 20% for example), you ‘save’ that interest payment of 20%, which is $0.20.

I don’t know about you, but I’d rather have $1 extra in savings than to save $0.20 on my debt.


  1. If you get a 50% – 100% employer contribution match, you are saving 100% more than what you put in
  2. If you don’t have the luxury of time (nearing retirement age = greater emphasis on saving something)
  3. If you live in a country where your retirement assistance from the government = pathetic

And that, my foreign friends, is why we talk so much about saving for retirement, even while we’re in debt 😉

Thanks, Earin!

About the Author

Just a girl trying to find a balance between being a Shopaholic and a Saver. I cleared $60,000 in 18 months earning $65,000 gross/year. Now I am self-employed, and you can read more about my story here, or visit my other blog: The Everyday Minimalist.