Clients are told over and over that they should maximize contributions to retirement accounts, such as 401(k) plans and individual retirement accounts.

That advice is wise for the most part, advisers say, because it allows clients to save for retirement while saving on taxes at the same time.

But there are instances when maxing out retirement contributions doesn’t make sense, they say.

“I run across that scenario occasionally with clients,” says Jack Riashi, a CFP and adviser at Bloom Asset Management in Farmington Hills, Mich. “The clients can be people who have a lot of high-cost debt or who don’t have an emergency fund or who have a big spending need.”

On the debt front, credit card debt is a good example.

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It is unlikely that a client paying a double-digit interest rate on that debt will exceed that rate with the return on investments in his or her retirement account. The long-term annualized return on stocks totals about 8%.

Thus, erasing the high-cost debt takes precedence.

“Debt is insidious,” says Kathryn Kennedy, a CFP and financial planning practice leader and senior adviser at HPM Partners in Chicago. “People don’t realize how painful long-term debt is.”

Clients also should establish an emergency fund totaling six to 12 months of spending needs before maximizing retirement contributions, in case they lose their job or face a health emergency, advisers say.

“There may be a period where something in your family is going on and you need extra cash flow,” Riashi says. “You can’t maximize retirement contributions then.”

Advisers’ clients also may have planned spending needs that demand outlays that could otherwise go to retirement accounts. That includes education, buying a home or starting a business.

“If you’re trying to save for a specific goal, it may be OK to reduce contributions,” Kennedy says.

Another issue is the quality of retirement plans.

“Some might not be good,” Riashi says.

For example, some 401(k) plans have excessive fees, few fund options or underperforming funds.

“There are still some plans that are below average,” Riashi says.

To be sure, in most cases clients should at least put enough money into their 401(k)s to receive the company’s match, if one is available, because that is free money, advisers say.

Meanwhile, Riashi has seen some rare cases where his clients already have socked away enough for retirement so they don’t have to add to the pile.

“Maybe these people aren’t living as well as they could be, so they can spend more,” he says.

“I have some clients in their late 50s who are already set, but are still saving 20% of their income. They don’t need to save that much,” Riashi says.

Dan Weil

Dan Weil’s work has appeared in The New York Times, The Wall Street Journal, Bloomberg, Institutional Investor and Tennis magazine.