Much has been made of the problems associated with student loan debt — and also of the need to save for retirement, as well as the importance of starting as early as possible. What’s a Millennial to do? In a recent Forbes.com post, John Wasik offers three suggestions.
Student loan debt affects more than 40 million Americans, according to iontuition. In a survey that the firm conducted recently, nearly 80% of respondents said they would like to work for an employer that offered a benefit to help them pay off their loans — and nearly half said they would rather have such a benefit than a 40(k).
Although both goals are essential, saving for retirement should be a higher priority, says Wasik, arguing that it’s possible to strike a balance between setting money aside for retirement and paying down student loan debt.
Wasik adds that automatic enrollment, as well as efforts to educate those with student loan debt about the ways in which compound interest can benefit a saver, can help prevent Millennials from sacrificing their retirement security to pay off their student loans.
A study by New York Life of pre-retirees between ages 50 and 62 with household income of at least $80,000 bolsters Wasik’s arguments. New York Life found that those who participate in automatic retirement savings vehicles were more confident about their retirement than those who saved in other ways. And 25% said they wished they had begun saving at least a decade earlier than they did.
