Do student loans prevent young adults from saving for retirement? Yes, finds a study by the Center for Retirement Research. Analyzing data from the National Longitudinal Survey of Youth, researchers at CRR examined differences in 401(k) participation and retirement plan assets at age 30 by student loan status at age 25 for the 1980 to 1984 birth cohort.
The findings: 1) Having student loans at age 25 had no impact on 401(k) participation at age 30, the study found. Among college graduates, 61 to 62 percent participated in a 401(k) regardless of student loan status or size of loan. 2) Having student loans at age 25 had a big impact on retirement plan assets at age 30. Those with no education debt had amassed $18,200 in retirement plan assets by age 30, while those with student loans had saved only half as much, regardless of the amount of debt. "The presence of the loan may be more important than the size of the payments," the study concludes.
Source: Center for Retirement Research at Boston College, Do Young Adults with Student Debt Save Less for Retirement?
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