Millennials and Gen Z aren’t the one generations fighting student loans. It seems child boomers and Gen X cope with student debt, too.
Data from AARP and the
‘s survey of Consumer Finances discovered that these age 50 and older held a few fifth (22%) of all US student loan debt in 2020. In 2004, that quantity was simply 10%.
According to the information, 8.4 million Americans age 50 and older held $336.1 billion of student loan debt in 2020. That averages $40,011 per household — a determine that almost matches the common 2019 student loan debt of $40,300.
And, as 50-somethings strategy retirement, that quantity of debt could possibly be problematic.
Over 20% of student debt was held by these age 50 and older
The information is not clear about whether or not the student loans held by these age 50 and older have been used for schooling for themselves or for household. But, the National Center for Education Statistics studies that about 10% of undergraduate students in the course of the 2016-2017 college yr acquired Parent Plus Loans, a kind of loan for folks that carries the next rate of interest than federal backed and unsubsidized loans. The common Parent Plus loan was $34,700 in the course of the 2016-2017 college yr.
The survey of client funds in 2019 discovered that the common student loan fee was $393 per 30 days, with a median of $222 per 30 days. While federal student loan funds are paused by September 30, 2021 because of the pandemic, student loan balances aren’t disappearing anytime quickly.
And, in an age when retirement financial savings ought to be a precedence, spending an additional $200 to $300 per 30 days on student loans might shortly create issues earlier than retirement even begins.
Baby boomers’ and Gen X’s retirement financial savings are already lagging
Baby boomers have saved for retirement, however the quantity that the standard particular person of their 50s and 60s has saved for retirement will not be sufficient to dwell on for a few years to come back.
According to information from Personal Capital, the standard American of their 50s has $530,000 saved for retirement, and the common particular person of their 60s has about $642,000 saved. And, whereas which may look like quite a bit, it might not go far.
Experts suggest utilizing the 4% rule to find out how a lot you may take out of your retirement account annually. A retiree with the standard quantity saved for a 60 yr previous might take an earnings of $25,680 per yr, or $2,140 per 30 days utilizing this rule, excluding any
and Social Security earnings.
In many elements of the US, $2,140 per 30 days is not sufficient to retire comfortably. While the IRS makes it potential to make catch-up contributions later in your working years, boomers and older Gen Xers could not be capable to take benefit in the event that they’re nonetheless saddled with student loan balances.