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Old 10-23-2017, 09:04 AM
Boatswain2PA Boatswain2PA is offline
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Join Date: Oct 2017
Posts: 3
Default Re: Pay student loan or fund retirement?

Quote:
Originally Posted by joseph2 View Post
I am 43 years old and earn about $63,000. I have a mortgage but no car loan or credit card debt. I have a year's worth of income in a MM account.

I have $80,000 in student loan debt. My payment is $436.00 a month at 2.875%.

I have a 401k through my employer. My employer contribution is 11% (yes, you read that right). I currently do not contribute to the 401K. I have been employed at this job for 9 years. It's my first benefits eligible job, so I have nothing to roll over. I hope to retire in 20 years.

Two months ago, I opened a Roth IRA. It is fully funded for this year.

I recently received a promotion and raise. I am now in a position to make double payments on my student loan and possibly pay it off in 10 years (rather than 30!). I would like to know if I should try to pay off the student loan or put the extra money in my 401K or my IRA. I do not plan to change my budget or personal spending; all of the extra income will go to either debt or retirement.
So you have $80K in student loan debt that got you a job making $63K/year at 43 years old. Ouch.

Good news is you have $63K in savings, and your employer is contributing 11% to your retirement without any input from yourself.

As long as you don't have other risk factors (aging home, pregnant/sick wife/kids, car about to die, etc), then I would take $58K from savings and pay toward your student loans, with the goal of having them paid off in another 12 months. The only retirement investing I would do between now and that time is funding your ROTH (and an HSA if eligible).

Next year you could be 44 years old and debt free (??).
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