According to a recent study, young career-goers who enter the workforce
without student debt are better set for retirement than their indebted
counterparts. Specifically, millennials with $30,000 in student loan debt
are more likely to enter retirement with significantly less savings than
other graduates their age.
In fact, students who graduate with debt could end up retiring with as
much as $325,000
less in their bank accounts than other retirees.
The study also revealed that, in 1990, the average student loan debt amounted
to about $10,000. Today, the average debt is $33,000. “We knew that
it was obviously going to be less money [in retirement],” a research
analyst told CNBC regarding the study, “but the compounding really
makes it a large difference for the 22-year-old.”
Student Debt Influences Other Financial Decisions, Too
In addition to limiting retirement savings, student loans influence important
financial decisions like buying a house and investing.
Paying a student loan every month is a financial burden that limits the
expendable monthly income of young households across the nation; additionally,
it keeps them from saving for the future. Although students can delay
paying back their loans, temporary solutions don’t address the larger issue.
More Retirement-Age Adults Have Education Debt
Education debt affects more than young college graduates. In fact, studies
show that in 1989, only 4% of retirement-age adults (those between the
ages of 55 and 64) had leftover debt from student loans. Today, roughly
30% of retirement-age adults have debts from school.
Individuals who enter the workforce without student loans are 60% more
likely to max out their employers’ match for retirement plans. Those
who start working and still have debt are less likely to maximize their
employer benefits for retirement.
What to Do if You Can’t Payback Your Student Debt
If you’re facing overwhelming debt, such as student loans, speak
with a Los Angeles debt relief attorney from our law firm today. We offer
skilled guidance for those facing serious debt, including bankruptcy and
alternatives to bankruptcy.