Paying off Low Interest Debt versus Retirement Savings

The question I have been analyzing lately:

Should I accelerate payments on my student loans and/or mortgage or add more to my retirement accounts. A lot of blogs out there trumpet to become debt free then save. Based on the math I have to disagree. The return on paying of lower interest debt is significantly reduced and in a sense you can lose money by not investing for retirement!

My Scenario:

I have 2 existing debts: my mortgage (4.5% fixed) and my student loan (2.625% fixed). Interest on both loans is tax deductible. With my risk tolerance and investment fix I am assuming that my returns from investing will be significantly higher than 4.5% (my highest rate debt). If this is true then I lose the return from the investments by paying down my mortgage faster. If I assume I will average 8% return over the long haul that means I stand to lose 3.5% per year and that is before I factor in the tax deduction. That adds up over the 30 year life of my mortgage and the compounding of my retirement savings!

As a result I have decided to make the minimum payments on the two loans and any additional money will go to my retirement and other savings goals. I am in the middle of building my full blown emergency fund now so it will get all of the extra money first. One I have it at a comfortable level I will focus mainly on retirement (I admit I am behind here) and then look at car replacement fund, laptop replacement fund, and other smaller goals that need to be addressed after my emergency fund is completely built.

In most cases if you return on the retirement savings investments beats your low interest debt be 1% or more you are probably better off saving the money instead of accelerating debt pay down. It feels great to pay off debts early but feels even better to know that you can retire comfortably without worrying about  making ends meet in your elder years.