Student loan debt isn’t just a millennial problem, it’s a growing nationwide epidemic for those approaching retirement.
According to an U.S. Government Accountability Office analysis of Survey of Consumer Finances data, outstanding federal student loan balances for people 65 and older have ballooned; jumping from $2.8 billion in 2005 to $18.2 billion in 2013.
In addition, the Federal Reserve Bank of New York reports that the total student loan debt of those over age 55 is now up to $43 billion. That’s a 500 percent increase, from $8 billion, in just seven years.
As these are increasingly affected by student debt, that impact is felt throughout their entire financial lives; especially when it comes to retirement.
The latest 2016 data from GoBankingRates show that 1 in 3 Americans has saved $0 for retirement. When broken down by age, the same report shows people over age 55 make up 28%, or more than a quarter, of those who have no money saved for retirement.
Add these individuals, the 75 percent of Americans over age 40 who are behind on saving, and the Congressional Budget Office projections that student loan debt will double by 2024 and you a have a recipe for financial hardship for should-be retirees.
Without assistance, monthly debt payments like student loans will limit waves of employees from retiring on time with a reasonable quality of life.
The burden of paying for educational debt on top of other expenses can be more than many retirees or employees preparing to retire can handle. GAO data shows that 27 percent of retirees ages 65 to 74 have loans in default. In addition, more than 50 percent of employees age 74 and above also fall victim to a loan default. The additional burden of student loan payments, whether for the employee or a child, is a hardship with far reaching effects including credit, healthcare, and employability.
REVERSING THE PROBLEM
The student loan benefit buzz that many companies across the nation are using to attract and retain millennials can help their existing workforce too. Innovative concepts like 401(k) contributions triggered by student loan payments and automatic payroll deductions that make loan pay down and saving easy can be key in fighting for a more retirement-ready workforce.
For example, a Baby Boomer, making $100,000 in salary who receives a Genius Match at 3 percent will benefit from an additional $37,091 at retirement. Those funds would cover an estimated 10 years of a student loan payment of $287.
Where to Start: Get the Data Your Company Needs
For companies who are committed to helping employees attain financial wellness, student loan benefits are a serious opportunity for all employees.
Let us help you get the answers on student loan benefits could positively impact your employees. Contact us to receive a short survey and free report, to view the real data on how student loans are affecting your organization’s health today.