When I recently helped a coworker open her first retirement account, I encountered a plethora of memories about what it’s like to be just starting out as a Retirist. This momentous step for my colleague –becoming a retirement saver and investor for the very first time – began with a simple* conversation, involving questions that are important to explore as you decide whether it makes sense to start dedicating money to your retirement. Simple question #1: Do you have any other debt, and if so, should you save for retirement or pay off the debt?

If the answer to the first bit is yes, you have other debt, the simplest path towards an answer is looking at your interest rates. Consider this example: You will (conservatively, and accounting for inflation) average gains of 5% over many years of investing in the markets. Meanwhile, you are paying student loans with a (usurious, but all too common) rate of 8%, with several years to go. Comparing the interest rate on what you owe with the rate on what you’d save for retirement, it seems to make sense to pay off your loans first.

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However, many other factors often complicate this answer. The best and most intriguing complication of course is free money – if your company offers matching, meaning it matches what you put into your 401(k) fully or up to a certain amount, you have found yourself with a 100% return on your investment (105% over time) and therefore a far more tempting savings proposition. Another complication is multiple kinds of debt, so the math can get trickier if you have, say, high interest credit card debt but low rates on your loans. Finally, your interest rates may not be fixed – they could be variable by nature (if you signed up for a variable rate loan that changes with the markets) or renegotiable through refinancing. The latter means that, should you be eligible through refinancing to reduce your loan’s interest rate to a new loan with a lower rate, you could change the equation in the retirement’s favor. I will write a whole post about refinancing in the near future, given that student debt is such a common enemy of young people’s retirement savings, but refinancing could also apply to loans such as mortgages.

Most importantly to my mind, this toe-to-toe interest rate method is undermined by both the benefits of compound interest and humanity’s lack of knowledge about the future. The former, I’ve tackled in the blog post linked above, while the latter you can tackle through common sense. Here it is: Know thyself. Student debt will be replaced by mortgage debt will be replaced by more student debt for the kids and maybe personal loans or credit card debt, depending on how things go. Are you really going to be able to wait until you are debt-free (or free of “high-ish interest rate” debt) to save for retirement, or is that a pipe dream and perhaps an excuse not to get a firm grip on your money today? Maybe a bit of both? That’s why, for most people, the equation about what to do with your money is a bit more complicated than a rate-to-rate comparison and can also involve action, maybe something like the table below.

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To recap, you should generally prioritize paying down high rate debt over retirement savings in order to stop losing money to interest payments, but don’t forget the numerous potential advantages of retirement savings. Know also that you can take other actions to reduce the rates you pay on some debt, freeing up money for other financial goals. (In fact, you should do that anyway because you are losing thousands of dollars if you don’t, so keep on the lookout for the student debt-related post.)

Because helping my coworker start up her retirement vehicle was such a delightfully warm, fuzzy, and galvanizing experience, I will continue to post a few items related to that over the coming weeks. In the meantime, please comment with any questions on the article here or your own situation – thanks for reading!

*That first conversation really began with me overhearing a friend chastising my coworker for not have a 401(k) and me flipping out and demanding change, but if I detailed every campaign of terror I’ve run to get people to care about retirement savings, I’d perhaps have fewer readers and very likely no friends.