Paying off student loans keeps more than 8 in 10 Americans from saving enough for retirement.
Student loan debt and retirement savings aren’t typically discussed together — but a new study suggests they should be.
By delaying saving for retirement, these young people might lose the ability to take full advantage of the powerful benefits of compound interest, that’s the snowball effect that occurs when reinvesting earnings on one’s savings to generate earnings, gets reinvested to create more earnings, and so on. Over time, compounding can substantially grow a person’s savings, so the earlier one starts saving, the better.
To be sure, a college degree remains one of the smartest investments a person can make in his or her financial future. A growing proportion of jobs require either a bachelor’s or associate degree or a certificate — and that trend will only accelerate. Colleges and universities must also focus on the issue of degree completion, which is a key factor in how student loan debt impacts borrowers’ financial lives. Many students who fail to graduate are unable to pay off their loans, even small ones, and end up worse off financially than when they first enrolled. Their default rate is almost 25%, compared with 9% for students who complete their degrees.
An equally important task for policy makers is to address the issue of Americans’ low financial literacy levels, which hinder people’s ability to effectively manage their financial lives. We know that high financial literacy levels are linked to the kinds of behaviors that increase financial well-being, like saving for retirement, having an emergency fund, and tracking spending.
France Dernières Nouvelles, France Actualités
Similar News:Vous pouvez également lire des articles d'actualité similaires à celui-ci que nous avons collectés auprès d'autres sources d'information.
How to spend your retirement savings without triggering a tax penaltyThe IRS requires savers to make withdrawals from their retirement accounts starting at age 70½. Here's what you need to know.
Lire la suite »
China will not resort to competitive yuan devaluation: PremierChina will keep its yuan currency basically stable within a reasonable range and...
Lire la suite »
11 foods that keep your brain healthyThe MIND diet: 11 foods to eat to keep your brain healthy. - NBCNewsBETTER
Lire la suite »
Your age-by-age checklist to prepare for retirement conversations
Lire la suite »
Spending tips to survive the holidays without debtSpending tips for millennials can help anyone who would like to survive the holidays without debt
Lire la suite »
I Bought A Home At Age 23 — Here’s How You Can Do The SameOne woman opens up about how she could afford to buy a home as a 23-year-old grad student.
Lire la suite »