Retirement Savings Impacted by THIS?!

(StraightShooterNews.com) – Highlighting a huge issue brought by elitist universities seeking to make a profit off the shoulders of Americans, student loan debts significantly reduce people’s ability to save for retirement.

As revealed by a study spanning three years, collaborative research between the Employee Benefit Research Institute (EBRI) and JP Morgan Asset Management highlights the “statistically significant negative impact” of education loans on retirement contributions.

The study shows that the financial strain of student loans decreases how much individuals can allocate to their retirement savings each month, which leads to reduced savings over the study’s duration.

The findings show a clear disparity in savings contributions between those with and without student loans. Individuals earning less than $55,000 and repaying student debt saved 5.3% of their income while their debt-free counterparts managed to save 5.7%. For those earning above $55,000 the figures were 6.1% for borrowers and 7.3% for non-borrowers.

About one-fifth of participants reported making student loan payments at least once during the three-year study, with only 12.1% doing so in all three years. The report also noted that younger and higher-income individuals were more likely to have ongoing student loan payments.

This is not the only recent study pointing out the profound effects of loan debts on retirement savings. A Morning Consult survey for healthcare technology company Abbott from October 2023 found that 46% of respondents believe their college debt has influenced their retirement savings, with 86% reducing their contributions and 44% withdrawing funds from their retirement accounts.

According to Abbott over 43 million Americans are currently grappling with student loan debts, which is the third-largest type of debt in the U.S. following mortgages and vehicle loans.

The introduction of the Secure 2.0 retirement law on January 1 and the resumption of student loan repayments after a COVID-19-related pause brings a new provision to enable employers to consider student loan payments as part of their matching contributions to 401(k) plans.