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Loans vs. Legacy: The Ongoing Impact of Student Debt on Retirement Savings

Posted on Mar 12, 2024 2:20:33 PM | By The Attigo Team
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The weight of student loan debt can cast a long shadow, impacting not just a person's financial well-being today, but also preparedness for the future. A recent study showed that Americans making student loan payments have up to 36% less saved for retirement compared to those without such debt (Source: ebri.org). This translates to a significant impact on both employee retirement contribution rates and retirement account balances. Additionally, the study showed that 84% of borrowers feel their student loans hinder their ability to save for retirement. However, there’s a silver lining: the study found that the presence of employer contributions and automatic enrollment features helped mitigate the negative impact of student loan payments on retirement savings.

Choosing Between Debt and Savings

According to the 2023 College Savings and Student Debt Study, 67% of recent graduates with student loans say their debt is preventing them from participating in major life milestones, such as saving for retirement (Source: fidelity.com). Nearly half of millennial and Gen Z retirement investors surveyed say they’ve dipped into their retirement savings to cover expenses, with student loans being the leading culprit (Source: morganstanley.com). This highlights a valuable opportunity for employers to support their employees' financial well-being and future security. By offering student loan repayment assistance, employers can empower their workforce to prioritize retirement savings while still working toward student loan repayment success.

A SECURE Solution

The recent Setting Every Community Up for Retirement Enhancement Act (SECURE Act 2.0) legislation introduced a new student debt retirement benefit providing plan sponsors the opportunity to match employees’ student loan payments as a traditional retirement plan contribution (Source: fidelityworkplace.com). This innovative option empowers employers to help employees address their student loan burden while simultaneously encouraging them to build a nest egg for their future.

Assistance from Attigo

Like any changes to employee benefits, the SECURE Act 2.0 may seem like a daunting task to add to your already busy schedule. Fortunately, Attigo by Ascendium can help you and your employees take advantage of the student loan retirement match tied to the SECURE Act 2.0. Through automatic payroll deduction, we make it easy to track and verify employees’ student loan payments.

Our updated Employer’s Guide to Student Loan Repayment Assistance e-book provides comprehensive guidance on student loan repayment assistance programs, making it easy for you to offer this valuable benefit to your employees. By taking proactive steps, you can not only attract and retain top talent but also foster a financially secure future for your workforce.

Download our e-book today and learn how you can empower your employees to achieve their financial goals.

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