A majority of U.S. workers hold debt in addition to their mortgages, and that’s a problem regarding financial security during retirement, says a recent study. It found that this debt is hurting its holders’ ability to save for retirement.
LIMRA reports in “Danger Ahead? Impact of Debt on Retirement Saving” that approximately 70% of U.S. workers hold non-mortgage debt, and less than one-third of them were saving for retirement through means other than employer-provided retirement plans. More than three times that percentage of U.S. workers who do not have non-mortgage debt — 63% — are saving outside such plans, LIMRA says.
Also sobering is the relation LIMRA found between age and the likelihood that non-mortgage debt will affect retirement savings. More than half of the Baby Boomers in their study are saving for retirement outside employer plans; 34% of members of Generation X are doing so; and a mere 20% of Millennials who hold non-mortgage debt are saving in such a way.
But the report also offers hope. LIMRA suggests that offering debt management services that balance debt repayment with saving for retirement regardless of their debt levels can help. In addition, LIMRA says, education will help with management of financial obligations. LIMRA says that it has found in earlier studies that approximately half of consumers are interested in financial education, and that one of the topics is retirement planning.
