Parents Burdened With Student Loan, Struggling To Save For Retirement.
Saving enough for retirement can be difficult enough for most people, but having to take out student loans for your children can make that even harder. This process has left many adults in a position where they cannot afford to put the necessary money away for their own retirements.
There is a general belief that an investment in education was worthwhile because it would result in a higher paying career. Under this assumption, money spent on education would be an investment in itself. Unfortunately the job market doesn’t provide enough high-paying jobs to meet the demand.
According to a research by LIMRA, millennials who begin their careers with $30,000 in student loan debt may find themselves with $325,000 less at retirement than their debt-free peers. For $50,000 of debt, this figure gets closer to $530,000. Average student debt, which was just $10,000 by 1990, increased to $33,000 in 2015. This means that the retirement problem is only getting worse as costs for education continue to increase.
The under-35 age group has more than tripled its education debt since 1989. According to LIMRA’s report, the average education debt increased from $3,000 in 1989 to over $19,500 in 2013.
LIMRA also researched the increase in student debt for retirees and pre-retirees.
The following charts show that student loans represent nearly one third of total non-mortgage debt of pre-retirees and make up a large portion of a retiree’s total non-mortgage debt as compared to previous years. The percentage of student loans in this chart consists of loans taken by parents or grandparents for their children’s as well as their own education.
Installment Debt for Pre-Retirees Installment Debt for Pre-Retirees
(age 55-64), in year 1989 (age 55-64), in year 2015
Installment Debt for Retirees Installment Debt for Retirees
(age 65-74), in year 1989 (age 65-74), in year 2015