This came across in my inbox this morning in a professional email journal. I found it to be very interesting. Read on:
Older people are finding their retirement is being threatened by—student loan debt?
That’s, right, according to a new LIMRA Secure Retirement Institute study, which found that both pre-retirees and those who’ve already retired are staggering under the burden of student loan debt.
One would expect that with all the headlines about student loan debt, younger generations are having trouble saving for retirement — and, indeed, that’s true. But what might surprise you is that both pre-retirees, those aged 55–64, and retirees too — 65–75—still carry large amounts of student loan debt.
This might be surprising, but it’s not exactly news. Last September a GAO report talked about the number of older Americans whose Social Security benefits were being diverted to pay for uncollected student loan balances. What is news is the rate at which student loan debt is escalating among the older set—not just the amount but the percentage of their debt.
In 1989, for instance, education loans made up 4 percent of installment debt for pre-retirees, averaging $600. In the same year, retirees were holding less than 1 percent of their debt in student loans, totaling around $400. But by 2013, that had ballooned to 30 percent of pre-retirees’ debt, totaling an average of nearly $8,000, while retirees were carrying 15 percent of their debt in student loans totaling more than $2,300.
According to the institute, the rapid rise in student loan debt among older people is a result of parents and grandparents taking on the burden to try to help out the kids. And that’s not all they’re paying for: earlier institute research found that 16 percent of parents are picking up the tab for their kids’ credit cards or car loans, while 36 percent are forking over the funds for an adult child’s cellphone bill.
That familial devotion, or altruism, is costing them — because it’s making it that much harder to save for retirement at a time when those expenses are imminent or taking money away from that needed to pay for living expenses during retirement.
“When older parents contribute to their adult children’s expenses it results in one more barrier to retirement saving,” Michael Ericson, analyst for LIMRA Secure Retirement Institute, said in a statement.
Ericson added, “Our research shows that 41 percent of retirees have mortgage debt. So, before they can save money for retirement — which can last 20 to 30 years — they have to pay their debt and their children’s debt and expenses.”
http://www.benefitspro.com/2015/05/29/student-loans-threaten-retirement-savings?eNL=55688d75160ba0f22efb8334&utm_source=BenefitsProDaily&utm_medium=eNL&utm_campaign=BenefitsPro_eNLs&_LID=129707184