Insurance giant Travelers has announced a new benefit for its employees that “takes the tough choice out of paying down student debt or saving for retirement.”
With “The Travelers Paying It Forward Savings Program,” payments by eligible employees toward their student loans will qualify for the company’s 401k plan matching program.
The company says the new program will help tackle two of the biggest financial challenges Americans face today: getting out from under the burden of student loan debt and building healthy savings for retirement.
“We have the most talented workforce in our industry and benefit immeasurably from the education and expertise they bring to their work,” Alan Schnitzer, chairman and CEO of Travelers, said in a statement. “Yet many of our colleagues all too often struggle to save for retirement because student loans weigh so heavily on their finances. Investing in their education shouldn’t stop our employees from investing in their future. We are promoting a standard of employee care that enables them to do both.”
Hefty Burden
According to the Federal Reserve, student loan debt in the United States reached more than $1.5 trillion at the end of 2018.
Starting to save early is key to a healthy retirement fund, yet the Fed’s latest Report on the Economic Well-Being of U.S. Households noted that 41 percent of 18- to 29-year-olds said they had no retirement savings.
The report also highlighted that 42 percent of those who attended college, representing 30 percent of all adults, have incurred at least some debt for their education.
As part of its benefits package, Travelers currently has a “matching” program for employee contributions to 401k accounts.
Beginning in January 2020, when “The Travelers Paying It Forward Savings Program” takes effect, student loan payments will also be considered when determining the company’s 401k contribution.
Employees, including those who are not able to contribute at all to their 401k accounts because of student loans, who participate in the new program could accumulate tens of thousands of dollars in their 401k accounts over a decade, “which could be worth hundreds of thousands of dollars at retirement.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
