Millennials Will Retire 12 Years Later
According to a study by NerdWallet, current college graduates are expected to retire at 73, 12 years later than the current median retirement age of 61, because of soaring student loan costs. With tuition having skyrocketed by 200% over the last 30 years, future grads will have an even harder time saving up before retirement.
The study broke the numbers down by averages. The average student graduates with about $23,300 in debt. The average starting salary for a graduate is $45,327 (18 percent of graduates are unemployed at the time of their graduation). The average loan repayment plan is 10 years at an average of $2,858. The average graduate will pay off $28,584 while the average struggling graduate will pay more than $50,000 because of high interest rates.
The study projects that after 10 years, the average graduate will be 33-years-old and be able to have saved less than $3,000 toward retirement because of the yearly loan plan obligations. The average graduate with no debt will have saved around $30,000 toward retirement. Since that money will have earned a compounding interest, by the projected retirement age of 73, the average retirement savings lost because of student debt obligations will be around $115,000. A struggling student who wasn’t able to pay regularly will have lost more than $200,000.
Ironically, the difference between the average graduate and the average struggling graduate isn’t all that different. The average retirement age is projected at 73 while the retirement age for a struggling grad is projected at 75. The struggling graduate can expect to have nearly $100,000 less in retirement savings than the average graduate.
Of course, retirees have 401Ks and Social Security benefits. For now. The Social Security program as we know it will run out of money in 20 years. That means reform, while not immediate, will be necessary long before millennials can retire. Reform would likely involve raising the retirement age and cutting benefits in the area of 25 percent. Certainly, by the time current graduates get to their seventies, they won’t be able to enjoy the same level of benefits that current retirees do.
About the author
Igor Derysh is the Managing Editor of Latest. com and a syndicated columnist whose work has appeared in The Los Angeles Times, Chicago Tribune, Boston Herald, Baltimore Sun, and Orlando Sun Sentinel, and AOL News. His work has been criticized in even more publications. Follow him on Twitter @IgorDerysh