Staying on top of your student loans and consistently investing for retirement are great steps to improve your overall financial wellbeing.

But some student loan borrowers may have to choose one or the other.

As payments resumed on federal student loans this fall, 66% of borrowers say they have had or will have to reduce their retirement contributions in order to restart their student loan payments, according to a recent survey from Allianz Life. 

An even higher percentage — 82% — say their student loan payments will make it difficult just to make ends meet, the survey found.

It’s not surprising that so many borrowers are looking for places to make room in their budget. But pausing retirement contributions may not be the best way to do that. 

Here’s why cutting your retirement contributions should be a last resort and how it might get easier to save while paying down your student debt.

You have to meet the minimum monthly payment on your student loans. And if that means not being able to contribute to retirement savings for a period, it’s OK for it to take priority in order to avoid consequences like damage to your credit score or having your wages garnished. 

But if you can contribute anything to a retirement savings account, it’s smart to do so — especially while you’re relatively young. While you might have more money to contribute when you’re older, “you can’t make up for lost compounding years,” Melinda Satterlee, a certified financial planner and founder of Marathon Wealth Management LLC, tells CNBC Make It.

She’s referring to compounding interest, which helps your investments grow over time. Time invested is key — the longer you wait to start investing, the less time your returns will have to grow.

“Compounding is so powerful for growing wealth,” Satterlee says.

Ideally, you’re always able to contribute something to your retirement accounts. But if you absolutely need to cut back, “You are better off reducing your retirement savings, but continuing to save and invest versus waiting and investing more,” she says.

Plus, she highlights the fact that if you’re contributing pre-tax dollars via an employer-sponsored retirement account like a 401(k) or 403(b), your contributions will lower your adjusted gross income, which could in turn lower your monthly student loan payment. 

Income-driven repayment plans, like the Saving on a Valuable Education plan that launched this year, use your adjusted gross income to calculate your monthly payment. The lower your income, the lower your payment — even down to $0 a month for individual borrowers who earn $32,800 a year or less.

Employer 401(k) matching is a fairly common employee benefit that’s smart to take advantage of when available. If you can, try to contribute up to the full amount your employer will match.

Contributing less is like leaving “free money” on the table, financial experts say, because when your employer matches your investment, it’s like getting a guaranteed 100% return. If your employer matches your contributions up to 5% of your salary, for example, aim to set your payroll dedication at that rate or higher.

And in 2024, employers will be able to match your student debt payment with a contribution to your retirement account. Under the Secure 2.0 act passed in 2022, companies are able to offer this new benefit to help employees get out of debt without sacrificing valuable years of saving for retirement. 

Your main priority right now may be to be completely debt-free, and that’s fine. But if you’re looking for overall financial wellbeing, you’ll probably have to multitask a bit while you’re paying off your student loans.

“If paying off debt helps them sleep better at night, that can take precedence,” Satterlee says. “But I think a balanced approach to both debt and retirement savings is possible and is best.”

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