Student Loans: Earn a Degree, Delay Retirement Security

By ASPPA Net Staff • February 10, 2016 • 0 Comments
Student loans can be a help in earning a college degree. That’s a good thing, since that degree can help that former student pay off the loan and try to come closer to a day when he or she can start saving for retirement in earnest. Recently released research includes data on what student debt can portend for Americans’ retirement readiness of U.S. employees.

Prudential Financial, Inc. and the Center for Retirement Research (CRR) at Boston College recently released the latest National Retirement Risk Index (NRRI). BenefitsPro report that its key finding is that “if today’s working-age households had the same level of student debt as those recently leaving college … an additional 4.6 percent of households would be at risk of having inadequate income in retirement.”

The CRR also has released “Will the Explosion of Student Debt Widen the Retirement Security Gap?” a new Issue in Brief that concludes that if the households studied in the NRRI started out with current level of student debt, the risk to retirement readiness it reports would be even higher than it is.

The research suggests that the higher earning potential a college degree can impart can be mitigated by the effect of debt incurred to pay for that degree — which, in turn, can delay the ability to save for retirement. And that holds true for parents as well, since they sometimes take loans to pay for their children’s college education.