May 10, 2013 (PLANSPONSOR.com) – How people deal with their student debt could derail their efforts to save for retirement.
The American Institute of CPAs (AICPA) recently released the results of a survey about how people are handling repayment of student loans and nearly half said they have postponed contributions to retirement plans because of it.
When asked if the student loan debt experience points out a need for good savings habits and maintaining a good level of financial literacy, both of which could positively or negatively impact saving for retirement down the line, Ernie Almonte, chair of the AICPA’s National CPA Financial Literacy Commission, told PLANSPONSOR, “One of the most startling statistics from our survey is that only four out of 10 people fully understood the burden that student debt would place on their futures. This really underscores the importance of financial education so that young adults realize how decisions they make early on will reverberate through the rest of their lives.”
Almonte added, “Make no mistake: a college degree can be a powerful investment. But the payoff is diminished if the debt takes decades to eliminate and slows progress toward future goals like retirement. Our survey showed that many people are making just that sacrifice. Forty-one percent of those surveyed said they have delayed contributions to retirement accounts because of student debt.”