According to various "retirement benchmarks," I haven't saved enough for retirement yet. Even so, I decided to take a temporary reprieve from saving for retirement as I tackle financial goals that are more pressing and important to me.
Some experts say a person who wants to retire by age 60 should have 3.5 times their salary in savings by age 40. I am about $60,000 short of that retirement benchmark.
Although I have saved and invested faithfully for my retirement since I was 30, I plan to take a 5-year break.
Making our retirement accounts more even
My husband will continue to contribute to his retirement plans since his company offers a 401(k) match. He also has a Roth IRA. Since my husband's Roth IRA balance is less than my Roth IRA balance, he can beef his up as I temporarily stop making contributions to my account. My 401(k) balance is also greater than his. During the next 5 years, he will bring his balance up to the same level or higher than mine. The money I used to save for my retirement is now being diverted to more important goals.
Spending money on the kids' college
Instead of saving so much for retirement, I am puttnig more money in an investment account for the kids' college fund. With the extremely high college loan interest rates, my money can go further. Also, we will have a tax deduction by helping to pay our sons' college tuition. Helping to pay for my sons' education is a greater priority than having more money that I need in retirement. They will be able to graduate with no college debt.
Paying off the house
A lot of financial experts have advised me not to pay any extra on my mortgage. As a personal finance writer, I've received unsolicited advice from financial advisors who think I'm making a foolish move by paying down my mortgage debt. Although I appreciate the concern and prudent advice, I feel better living a life without debt. In five years, when my mortgage is paid off, we will have better cash flow. We will have more money to save for retirement and more money to spend.
Retirement is still about 30 years away for me. With close to $100,000 stocked away in my retirement accounts, I feel comfortable taking a 5-year break as I pay off our mortgage debt and pay college tuition. I know my accounts will continue to grow due to compound interest.
I've heard the cliché that you can borrow for your child's college education, but you can't borrow for retirement. Like a lot of personal finance advice, I think it's a "personal" decision.
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