I'm 34 and have been maxing out my 401(k) and my (and my wife's) IRA contributions pretty much since I started working 12 years ago. It's almost religion to me.
I'm still maxing out my 401(k), but this year is the first year the market has me so ... unenthused ... that I'm seriously considering forgoing the IRA contributions this year and instead using that money to do something that I've been considering for a while: paying off a student loan at 5.075% interest.
I know retirement savings is very important, especially in these tax-favored plans. But a guaranteed return of 5.075% is very tempting right now. (Further dampening my enthusiasm for my IRA is that I am not eligible for a Roth IRA or a deductible IRA, so it was only going to be a non-deductible IRA contribution.) I don't qualify for any deduction of the student loan interest.
What do you guys think? If you had to choose between:
- non-deductible IRA contribution
- paying off a 5.075% student loan
Which would you chose and why?
I'm still maxing out my 401(k), but this year is the first year the market has me so ... unenthused ... that I'm seriously considering forgoing the IRA contributions this year and instead using that money to do something that I've been considering for a while: paying off a student loan at 5.075% interest.
I know retirement savings is very important, especially in these tax-favored plans. But a guaranteed return of 5.075% is very tempting right now. (Further dampening my enthusiasm for my IRA is that I am not eligible for a Roth IRA or a deductible IRA, so it was only going to be a non-deductible IRA contribution.) I don't qualify for any deduction of the student loan interest.
What do you guys think? If you had to choose between:
- non-deductible IRA contribution
- paying off a 5.075% student loan
Which would you chose and why?