Why I’m saving less for retirement

Many financial advisers emphasize the importance of building a large nest egg. While a large nest egg is a great idea, this strategy can make people focus on the future at the expense of the present.

That’s a trade off we’re not willing to make.

Many people view their retirement balances as the solution to their situation–working an unpleasant or demanding job–only to fall short of their goal. Instead we’ve decided to focus on eliminating debt before heavily investing for our retirement.

We might end up with less money, but eliminating these fixed costs will free us to work when and where we want to.

Of course, we could work more now so we’d be able to rapidly pay down debt and invest more. But this would negatively affect our quality of life for us and our children.

That’s another trade off we’re not willing to make.

So what are we missing out on by focusing on our mortgage instead of our retirement? Well, we are getting our full 401k match, so we’re saving almost 10% of our gross income. Perhaps we’re not missing out on much.

Ditching debt

Debt is an obligation and as such, it’s a claim on the fruits of our labor. Depending on how much debt one has, debt even has the power to push people into jobs they hate!

That’s why we’re paying off our 30 year mortgage as quickly as possible.

We’ll be avoiding more than two decades’ worth of interest payments. And once we’re free, we’ll still have the opportunity to benefit from compounding interest.

We might even come out ahead if the stock market returns less than pre-paying our mortgage saves us. Higher or even positive returns are not guaranteed, despite the markets upward trend.

How have you chosen to balance life? Are you working towards an early retirement, or are you trying to enjoy the best of retirement today?