The resurgence of student loan payments next week won’t just fall on younger workers—a small group of seasoned employees are also set to feel its repercussions as well.
New data from the Nationwide Retirement Institute finds that 12% of employees ages 45 and up currently hold student loan debt, and 61% believe the reinstatement of student loan payments has negatively impacted their financial stability and long-term financial planning. Sixty-six percent expect the payments to have an adverse impact on their retirement planning.
To offset negative impacts, 29% of individuals in this age group say they will adjust their retirement plan contributions to keep up with payments, while 18% have already done so.
Almost half (49%) are debating whether their retirement goals are feasible due to the resurgence of payments, and 59% are considering seeking additional employment to afford the payments while still contributing to their retirement savings.
Others are already seeing the effects of the repayments. Twenty-four percent of employees ages 45 and over are expecting to retire later than they planned to a year ago, and 9% do not believe they will ever be able to retire. Of those 9%, 61% are nervous of not being able to live the life they want in retirement, 52% are worried over a future recession, and 50% are scared of outliving their retirement income.
Their concerns are further exacerbated by rising health care costs (65%), inflation (62%), and potential Social Security insolvency (59%).
Workers look to employers for help
Without any other assistance at hand, workers are increasingly looking to their employers for help, finds Nationwide. Eighty-five percent of employees ages 45 and up with student loan debt say they would be interested if their employer offered a match to their loan repayments for retirement savings.
Eight in 10 businesses (81%) note that employees have inquired about steps to better prepare for retirement, and nearly two-fifths (39%) of businesses have seen more employees leave for companies with better benefits over the past year as a result of economic uncertainty, reported Nationwide.
The survey notes how provisions offered through SECURE 2.0 now allow employers to provide matching retirement plan contributions based on the amount employees defer towards their student loan repayments.
Additionally, with a growing number of employees expressing interest in pension-like income streams within retirement plans, as reported by Nationwide, more employers might consider looking into guaranteed lifetime income products to help with retirement and financial confidence.
“Between student loans, interest rate increases and inflation, employees have a lot to navigate when planning for retirement,” said Eric Stevenson, president of Nationwide Retirement Solutions, in a statement. “There is a strong business imperative for employers to help.”
Nationwide’s survey fielded responses from 600 plan sponsors and 1,200 retirement plan participants.
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