A new NerdWallet study finds that rising rents and increasing student loan debt have pushed the retirement age to 75 for college graduates. That’s an increase from NerdWallet’s last analysis, which used 2012 data and predicted an average retirement age of 73 for the Class of 2013.
NerdWallet’s Andrea O’Shea writes that compared to the current average retirement age of 62, today’s college graduates will work 13 years longer. And, with an average life expectancy of 84, they’ll spend only 9 years in retirement.
NerdWallet’s research is based on a 23-year-old new graduate earning the current median starting salary of $45,478.
Quick facts on young graduates:
- Average student loan debt: $35,051
- Student loan repayment plan: 10 years
- Average yearly loan payment: $4,239
“The student loan crisis is not only affecting new graduates’ immediate financial situation, it’s making their retirement prospects dwindle,” says Kyle Ramsay, investing manager at NerdWallet. “Based on our findings, higher loan payments have the potential to reduce nest eggs by 32%. That’s nearly $700,000 in this scenario.
“The two most important things millennials can do is save more and save early,” Ramsay added. “Compound interest is a powerful force that can build a comfortable nest egg. For example, if a 23-year-old invests $10,000 at a 6% return today, it could be worth twice that amount by the time he is 35 years old and 20 times that by the time he is 75.”
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