Student loans get in the way of retirement savings — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Student loans get in the way of retirement savings

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in Compensation and Benefits,Human Resources

Student loans can be a drain on short-term finances, but a new survey from benefits consulting firm Aon Hewitt found that employees with student loans can continue to feel the strain into their retirement years.

The survey of more than 2,000 U.S. workers found that 28% of respondents currently have an outstanding student loan, and it’s not just younger workers. Nearly half of millennial workers (44%), 26% of generation X and 13% of baby boomers carry student loan debt. Roughly half must pay back at least $3,000 per year.

Student loans can have a long-term impact on workers’ financial future. Employees with student loans participate in employer-provided retirement plans at a lower rate than those without loans—71% compared to 77%.

Even more concerning, 51% of workers with student loans contribute no more than 5% of pay to their plan. According to Aon Hewitt, saving less than 6% of pay can significantly hinder retirement readiness, especially because most workers miss out on full company matching contributions.

Aon Hewitt says HR can help debt-burdened employees by offering workshops on personal financial planning and budgeting. That’s especially useful when paired with information on retirement plan participation. Some employers even offer benefits specifically designed to help employees pay down student debt.

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