NEW YORK July 30, 2019 – A large majority of American adults (84%) report that student loans are negatively impacting the amount they are able to save for retirement, according to new research sponsored by TIAA and conducted by the MIT AgeLab. Nearly three out of four (73%) borrowers report they are putting off maximizing their retirement savings, saying they expect to begin or increase their contributions once their student loans are paid off. Among those who are not saving for retirement at all, more than one quarter (26%) point to the need to pay off student loan debt as the reason.
The yearlong study, which explores the intersection of student loan debt, longevity planning and family dynamics, shows that life stage—and who the loans are being taken out for—plays a key role in the balancing act of paying off student debt and saving for retirement.
Borrowers of all ages, including parents and grandparents, are making financial sacrifices to repay student loans
Among 25- to 35-year-olds who are not saving for retirement, 39% say they are prioritizing student loan payments. Of the parents and grandparents taking out loans for children and grandchildren, 43% say they will increase retirement savings once the student loan is paid off. In focus groups, women, in particular, described the struggle of sacrificing their own financial security in retirement in order to put their children’s education and wellbeing first.
“To be sure, getting a college degree remains one of the smartest investments a person can make in their financial future – but saving for retirement is equally important,” said Roger W. Ferguson, Jr., president and CEO of TIAA. “We believe that advice and coaching are key to navigating what can seem like competing demands. TIAA has found that people who engage with qualified financial professionals are better equipped to make decisions about paying for education for themselves or a loved one without sacrificing their future financial security.”