“Let Pharaoh proceed to appoint overseers over the land and take one-fifth of the produce of the land of Egypt during the seven plentiful years. And let them gather all the food of these good years that are coming and store up grain under the authority of Pharaoh for food in the cities, and let them keep it. That food shall be a reserve for the land against the seven years of famine that are to occur in the land of Egypt, so that the land may not perish through the famine.” — Genesis 41:34-36 (ESV)
Are you feeling like you can’t tackle your debt and plan for retirement at the same time? You’re not alone. The typical American is carrying around $104,215 in debt, and 61% of people over 50 are anxious about not having enough money to retire.
Just as Joseph advised Pharaoh to set aside a portion of Egypt’s produce during the years of plenty to prepare for the years of famine (Genesis 41:34-36), you too can take proactive steps to manage both your debt and retirement savings. It’s no fun to be in that position, but you don’t have to stay stuck, choosing between paying off debt and saving for your golden years. You can actually do both!
It may take time, but with daily, clear steps, you can chip away at your debt and get your retirement savings back on track. A financial advisor from EagleFlight Wealth Management can help you find that sweet spot where you’re managing your debt and building your retirement nest egg at the same time.
Debt Management vs. Retirement Planning: You Can Do Both
At first glance, paying off debt and retirement planning seem at odds. How can you squirrel away money for retirement when you’re paying off a mortgage, student loans, auto loans, credit card debt, or a personal loan—or all of the above?
However, debt management and retirement planning are complementary; they work together. The sooner you pay off the money you owe to someone else, the earlier you can begin paying more to yourself, giving the power of compounding interest a chance to work as you build your retirement savings.
Many financial professionals recommend saving 12% to 15% of your salary every year for retirement. That can be tough to do with debt payments chewing up a good portion of your income. But if you start small, you can work your way up—and someday you could have multiples of your yearly salary saved up. Right now the goal is to begin saving while still paying off your debt.
7 Steps to Paying Off Debt and Saving for Retirement
The daily weight of debt can be crushing, but you can dig your way out by taking a strategic approach to your finances. Consider these seven steps to pay down your debts and boost your retirement savings:
1. Analyze Your Debt, Spending, and Budget
Start by listing how much you owe and the interest rate of each debt. Examine your spending and cut out nonessential expenses, and then track your spending in a budget spreadsheet or app.
2. Set Clear Financial Goals
Having goals to work toward can help you stay motivated and stick to your strategy. Keep your goals reasonable and attainable, and adjust them as your income changes.
3. Debts vs. Investments
Compare the interest paid on your debts to the interest earned on any investments. If the interest on a debt is higher, make it a priority.
4. Prioritize High-Interest Debts
Pay off debts with the highest interest rates first to save the most money over time. When you eliminate one debt, use that monthly payment to boost your savings or accelerate another debt payoff. You also can consider consolidating multiple debts, giving you one payment with a potentially lower interest rate.
5. Incremental Savings Increases
As you pay off your debts, boost your salary, or receive gifts of money, put the additional money toward your savings.
6. Emergency Fund
An emergency fund covers unexpected expenses. Once you start saving, prioritize building an emergency fund to avoid future debt when something unforeseen happens.
7. Employer Match
An employer match is almost like a salary increase. If your employer matches contributions to your retirement plan, your contribution should be at least high enough to get the full match.
Work With a Trusted Professional
Clearing your debt and planning for retirement might seem like they’re at odds, but the less debt you have, the more you can save for your future. At EagleFlight Wealth Management, our financial advisors are here to help you steward your money well, managing your debt and getting your retirement on track at the same time.
Give us a call to schedule an introductory meeting bycalling (765) 288-1927 or emailing barry.hickey@cfdinvestments.com or drop us a line to set up your first chat.
About Barry
Barry Hickey is the founder, managing partner, and financial advisor at EagleFlight Wealth Management, a financial services firm based in Muncie, Indiana, helping people live and retire with dignity and financial peace by planning their financial future with a biblical worldview. Barry has been in the financial services field since the mid-1980s. In 2006, inspired by Isaiah 40:31 (“They that wait upon the Lord shall renew their strength; they shall mount up with wings as eagles; they shall run, and not be weary.”), Barry became an independent financial advisor and founded EagleFlight with the mission to help people plan for their financial future and find financial peace, and to fulfill the mission God gave him.
Born and raised in Muncie, Barry graduated from Muncie Southside and served in the Marine Corps during the Vietnam War. He holds a Series 6, 7, 63, and 66 securities licenses and the Indiana Life and Health Insurance License. He also holds the Accredited Asset Management Specialist℠, Chartered Retirement Planning Counselor℠, Certified Kingdom Advisor®, and Retirement Income Certified Professional® designations.
Outside of work, Barry enjoys reading, watching football and baseball, and spending time with his wife (Carla), children (Kristin, Ryan, and Lauren), and grandchildren (Emmi, Cate, Ben, Maddie, Sophia, Bella, and Brady). His favorite Scripture is Matthew 6:33, “But seek first his kingdom and his righteousness, and all these things will be given to you as well.” To learn more about Barry, connect with him on LinkedIn.
Barry Hickey offers Advisory Services through Creative Financial Designs, Inc., a Registered Investment Adviser. Barry Hickey and Ryan Hickey offer Securities through CFD Investments, Inc., a Registered Broker/Dealer, Member FINRA & SIPC, 2704 S. Goyer Rd., Kokomo, IN 46902. 765-453-9600. EagleFlight Wealth Management is not an affiliate of Creative Financial Designs, Inc. or CFD Investments, Inc.