More Americans are working to pay off a debt that could affect their retirement savings, finds new research out today by Allianz Life.
The 2024 Annual Retirement Study from the firm found that 55% of Americans say they are currently trying to settle their debt to meet long-term goals, like retirement savings.
It’s likely these respondents are learning from prior generations. Among those who wish they would have saved more for retirement, 46% say non-housing debt from car loans, credit cards, and student loans are keeping them from saving more.
This type of debt was likelier to have a significant impact on Americans’ retirement. Thirty-four percent of Americans who wish they could have saved more believe housing debt limited their savings, while 39% of Gen Xers, 33% of Millennials and 34% of Baby Boomers say the same.
Gen X, especially, has this as a priority, reports Allianz Life. Nearly two in three Gen Xers (64%) say they are working toward paying off debt, compared to 54% of Millennials and 54% of Boomers.
“Debt can have a significant impact on achieving long-term financial goals like retirement,” said Kelly LaVigne, VP of consumer insights, Allianz Life. “It is important to find a balance between paying off debt and saving for your financial future. Limiting retirement saving because of debt can leave you vulnerable to outliving savings in retirement.”
The study comes as more Americans, and especially younger workers, list retirement savings as their top financial goal rather than debt management. According to findings from The Standard, 79% of Gen Zers describe saving as their top goal, and only 37% say they would categorize lowering their debt as a key focus.
To achieve their goals, workers are looking to their employers to incorporate workplace benefits like financial literacy. Eight percent of Gen Zers in The Standard study say they value working for an employer who provides support for financial literacy.
Studies show that incorporating financial wellbeing benefits could significantly improve productivity and happiness among workers. A 2023 report by MetLife found that 62% of employees believe their financial wellbeing significantly affects their job performance. As a result, businesses could be losing as much as $500 billion per year due to financial stress.
“Why wouldn’t companies provide Gen Z workers with tools to strengthen their financial literacy?” said Lauren Canfield, vice president, corporate actuary and chief risk officer at The Standard. “Reducing financial stress on young employees cuts down on distractions and positions them to bring their best to an organization.”
SEE ALSO:
Gen Z Names Savings, Not Debt Management, as Top Financial Goal
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
