A new survey finds that college debt is weighing down retirement prospects — and not just for Millennials.
The Aon Hewitt Financial Mindset Study, which surveyed more than 2,000 U.S. workers, found that 28% of respondents currently have an outstanding student loan, and it’s not just younger workers. According to the report, student loans are held by:
Weight ‘Rates’?
Those obligations may be weighing on participation and savings rates; workers with student loans are participating in employer-provided retirement plans at a lower rate than those without loans (71% versus 77%) — and more than half (51%) of workers with student loans are contributing no more than 5% of pay to their plan (though that also applies to 40% who don’t have those encumbrances).
Perhaps not surprisingly, Aon Hewitt’s data found that workers with student loans were more pessimistic about their financial wellbeing than those without loans. Specifically:
At least one study has found little correlation between college debt and retirement savings. And a recent Wells Fargo survey suggests that, despite college debt, Millennials are saving for retirement, though perhaps at reduced rates.
The Aon Hewitt Financial Mindset Study, which surveyed more than 2,000 U.S. workers, found that 28% of respondents currently have an outstanding student loan, and it’s not just younger workers. According to the report, student loans are held by:
- 44% — Millennial workers
- 26% — Generation X workers
- 13% — Baby Boomers
- Across all groups, roughly half are paying at least $3,000 per year.
Weight ‘Rates’?
Those obligations may be weighing on participation and savings rates; workers with student loans are participating in employer-provided retirement plans at a lower rate than those without loans (71% versus 77%) — and more than half (51%) of workers with student loans are contributing no more than 5% of pay to their plan (though that also applies to 40% who don’t have those encumbrances).
Perhaps not surprisingly, Aon Hewitt’s data found that workers with student loans were more pessimistic about their financial wellbeing than those without loans. Specifically:
- 51% say “debt is ruining their quality of life,” compared to just 28% of those without loans
- 54% spend time at work dealing with financial issues compared to 47%% without student loans
- 31% are worried about paying their bills, while only 20% of workers without loans share this concern
- 56% are worried about saving for the future compared to 41% of those without loans
- 27% said they are “financially comfortable” compared to 43% of their loan-free colleagues
At least one study has found little correlation between college debt and retirement savings. And a recent Wells Fargo survey suggests that, despite college debt, Millennials are saving for retirement, though perhaps at reduced rates.
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