Should I stop contributing to my retirement to pay off debt faster, and what is the trade-off?

This is perhaps the most debated and difficult decision on the path to debt freedom—the conflict between securing your future and eliminating the burden of the present. You’re asking, Should I stop contributing to my retirement to pay off debt faster, and what is the trade-off? The short answer is: it depends almost entirely on the interest rate of your debt and whether you are forfeiting a crucial employer match. This decision involves comparing guaranteed returns versus potential returns.
Understanding the Mechanism
The trade-off is comparing the guaranteed savings from not paying high interest to the potential loss of tax-advantaged growth and an employer match.
The High-Interest Threshold: The consensus among financial experts is a threshold of 8% to 10% interest. If your debt (credit cards, predatory loans) carries an interest rate above this threshold, the guaranteed saving you get from paying it off early often outweighs the potential, non-guaranteed return you might see in the stock market.
The Employer Match is Non-Negotiable: If your employer offers a 401(k) match (e.g., they match 50% of your contribution up to 6%), never stop contributing at least enough to get the full match. This is an immediate, 100% or 50% return on your investment, which you will never find in any debt payoff strategy.
Tax-Advantaged Growth: By pausing contributions, you lose the opportunity for your money to grow tax-deferred or tax-free (in a Roth IRA). This lost time, and the potential for compound interest, is the biggest trade-off.
Natural Strategies to Try
A tiered approach based on your debt interest rate is the most strategic way to balance these two priorities.
Tier 1: Never Stop the Match: Always contribute enough to your 401(k) to get the full employer match. This is the floor of your retirement savings.
Tier 2: Attack High Interest: Direct all money above the match contribution toward any debt with an interest rate above 10% (e.g., credit cards).
Tier 3: Continue Mid-Range Saving: Once all high-interest debt is gone, re-evaluate. You may choose to stop temporarily only for debt between 8-10% interest for a very quick payoff, but resume contributions immediately after.
Lifestyle Tips for Long-Term Security
This pause should be a brief, tactical maneuver, not a permanent retirement halt. The goal is to aggressively resume saving immediately after the debt is gone.
Set a Resumption Date: If you pause, write down the date when you will resume full contributions (e.g., the month after the target debt is paid off). Automate the increase.
Downsize the Sacrifice: Don’t stop all retirement savings. Just drop down to the minimum required for the employer match while you attack the debt.
Use the Full Amount: Ensure the full amount you are no longer contributing to retirement goes directly to your debt principal, not into your general spending.
Do not sacrifice the employer match. Beyond that, temporarily pause for high-interest debt (above 10%) for a quick, aggressive payoff, then immediately resume contributions. Share your experiences in the comments—what percentage interest rate was your deciding factor?