Don't even think about retiring until you have these 3 things completely paid off — your mortgage isn't one of them

School loans

College loans are some of the longest lasting debts Americans deal with. What’s more, those loans may increase as you near retirement if you’ve borrowed money to help children through college, too.

While federal student loans are inexpensive right now, the payment and interest freeze introduced by the Biden administration only lasts until the end of August.

And those loans last a long time.

According to a 2023 data from Education Data initiative, the average borrower takes about 20 years to pay off their loans.

The data also shows baby boomers carry the highest average balance at $45,136 per borrower, with Gen X right behind them at just over $43,438.

Unlike a mortgage, many student loans aren’t tax deductible, and data from StudentAid.gov shows that 2.5 million borrowers were aged 62 and older.

And many are also paying for their children’s education at the same time as loan debt becomes harder and harder for everyone to pay given rising interest rates and everyday costs. About 25% of borrowers age 50 or older make loan payments on private student loans because the student failed to do so, according to the AARP.

So all those payments take away from your retirement income. It is also worth noting your Social Security benefits can be tarnished if you default on some federal student loans, according to Education Initiative.

Americans should therefore find a strategy to pay off their student loans that’s similar to how they make mortgage payments. This would involve scheduled payments taken out on a regular basis, paying off that debt faster and bringing you closer to your retirement goals.

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Personal loans and credit cards

Personal loans and credit cards generally have the highest interest rates. This is especially true with credit cards, which currently have an average interest rate of 23.55% in the United States, according to LendingTree. It’s the highest rate since the company began tracking rates monthly in 2019.

It's not unusual for personal expenses to end up languishing on a credit card — both expected costs from moving or paying for a wedding as well as unexpected medical bills or funeral costs.

While credit card balances should be paid down quickly and well before you retire, you also shouldn’t let them delay saving for your retirement.

Instead of putting off saving, consider lowering your mortgage payments to use those funds to pay down other high interest loans.

Read more: Here's how much the average American 60-year-old holds in retirement savings — how does your nest egg compare?

Mortgages have lower interest, which will allow you to hold onto your savings and pay down debt.

Experts like Suze Orman say you need to start putting cash aside in an emergency fund as soon as you can and experts generally recommend you save about three months of wages. That way, if unexpected expenses come your way, you’ll be ready.

Auto loans

As of April, the average new car loan for a buyer with excellent credit is 11.19%, according to MyAutoloan.

But if you have bad credit, that average soars up to 21.51%. That’s about as much as the interest rate on a credit card.

Your interest rate probably lies somewhere in between, but it's still going to add up. The average monthly car payment recently spiked to $700, with many people grappling with $1000 car payments.

If $700 goes into a car payment, and $300 to a credit card and more for student loans, suddenly you have far less cash on hand to put toward your retirement nest egg.

However, if you hold off on retirement to pay off these loans, putting aside wages to pay them down aggressively, you could be saving yourself thousands in interest while creating a cushion to retire on.

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What about my mortgage?

So why not pay down your mortgage too? It’s not just the cheaper borrowing costs, although with the average national mortgage rate for a 30-year home loan is currently sitting at 6.27%, that is an advantage.

It's because there are tax benefits available to you for your mortgage as well. Homeowners can claim a federal and state tax deduction on mortgage and home equity loans that you don’t get with most personal loans and credit cards.

So while you may feel secure fully owning your home, paying off higher interest loans while putting extra cash into your retirement fund is the strategy more likely to bring you closer to retirement.

Need help? Talk to an expert

Preparing your finances for retirement can be taxing, especially given current inflation rates and a looming recession.

According to data from the Federal Reserve Board, only 40% of non-retirees feel confident about their retirement savings — clearly many Americans could use help navigating their finances and making sure their assets are protected.

Working with a financial advisor is often a smart move, and it’s better to get started sooner rather than later.

Since many people find it overwhelming to find a suitable and trusted professional, there are free online services designed to match you with a vetted financial advisor who will suit your unique needs.