Student Loans Impact Retirement Outcomes
It’s been well documented that Canadians are not saving enough for retirement. For a growing number of workers, those bringing student debt into the workforce, this struggle is real. The average student loan for Canadian post-secondary graduates is $28,000.
In a recent brief, the Centre for Retirement Research at Boston College reported that “college graduates with student loans accumulate 50% less retirement wealth by age 30” than graduates without student debt.
Stands to reason, no matter where you live – as young indebted workers enter the workforce to begin careers and adulthood, their required student loan payment defers not only retirement saving but many other financial choices of the young, like travel, further education, home ownership, marriage, children, even saving for emergencies.
And not only does the indebted group accumulate less retirement savings, the authors highlight that: “College graduates with small loans have no more in retirement assets than those with large loans,” suggesting that “young graduates consider the simple existence of a student loan – rather than its size – to be a constraint” on their retirement saving.
Employers offer group retirement savings plans as a means of helping their employees save for a comfortable retirement. Young people starting out with student debt are significantly disadvantaged from fully participating in the plan to achieve that goal. An employer assisted student loan repayment plan, such as YrPlans’ SLRP, can help set things right.
To learn how you, or your company, can participate in a student loan repayment plan, contact firstname.lastname@example.org.
Source: Rutledge, Matthew S., Geoffrey T. Sanzenbacher, and, Francis M. Vitagliano. 2018 “Do Young Adults With Student Debt Save Less For Retirement?” Issue in Brief 18-13 Chestnut Hill, MA Centre for Retirement Research at Boston College. © 2018 by Trustees of Boston College, Centre for Retirement Research