The burden of student loans is felt long after students leave the classroom. Many graduates are familiar with the obstacles of finding a well-paying job or affording daily living expenses, but the true financial impact of debt is a compounding problem for Millennials hoping to retire one day.
With the college debt bubble growing larger than $1 trillion in total outstanding loans, more harmful side effects are being realized each school year. A new report from NerdWallet finds that while retirement is not impossible, most students will have to wait until their early to mid 70s compared to the current average retirement age of 61. The delay comes from many students spending the first ten years or more of their careers paying down college debt, instead of saving or investing those funds and receiving the benefits of compounded returns.
“Far more than their parents, Millennials will have to rely upon proactive financial management to achieve their retirement goals,” explains strategy analyst Joseph Egoian from NerdWallet. “Each generation is afflicted with distinctive financial ills, but the challenge of college debt is unique to Millennials. The decline of pension plans, the uncertainty surrounding social security, and the college debt epidemic have placed the onus on graduates to make conscious, forward-thinking decisions about their retirement.”