When you’re in debt, it’s generally advised that you should avoid investing. The reason behind this thinking is that if you invest while you’re in debt, you’ll end up using your investments to cover your debt. This could end up driving you further into debt due to capital gains taxes or margin calls, and no one wants more debt.
At the same time, student loan debts are next-to-impossible to escape from. Paying back those loans often seems like the only thing you can spend your hard-earned money on before buying a house and saving for retirement. Yet by taking this approach, you could end up retiring much later than expected.
Jonnelle Marte of the Washington Post recently reported on the mistakes people with student loans make when it comes to saving for retirement. By avoiding these common financial errors, you could comfortably retire a lot sooner than you think and shake that nasty student debt.
Student loans are manageable. If you live within your means, you could pay them off and save for retirement. This means investing in vehicles like 401ks and IRAs while keeping your debt at a manageable level. These tools are different from regular investments, and incur massive penalties if you withdraw them too early.
If you put off saving or investing to a much later date, your retirement will be significantly smaller than it needs to be. This could mean retiring later and tacking on more debt when you can least afford it.